DrumBeat: August 25, 2008

Every American needs to understand that the world has now experienced three years of flat oil production and during those three years, another 230 million energy consumers were added to the population of the world. It is obvious to any observer that oil production, for whatever reason, whether geologic or geopolitical in nature, is not going to keep up with demand. Fifty-four of the 65 oil-producing nations have entered irreversible production declines. This is a matter of fact, not opinion. We can either continue to debate and watch opportunities pass us by or develop a sustainable future that reduces world tensions and our energy vulnerability.

Just because oil is found on American soil, does not make it American oil. Unless America is preparing to nationalize its resources, that oil will belong to an oil company. And that oil will go into a world market that we do not control—a market that is subject to the whims of OPEC, terrorists in Nigeria, Russian bullying, China roaring, and our own wasteful energy habits.

Many of the claims made by politicians and pundits can be tested against the Energy Information Agency’s database. How many times have we heard that American oil technologies would turn around the sagging oil production of nationalized oil fields in Mexico, Brazil, and Venezuela. If these technologies are so wonderful, how do you explain US production figures. After the US peaked in 1970 there was a huge spurt in drilling activity as evidenced by the gold line in the following chart...

The prospect of global wars driven by climate change is not something often discussed publicly by our political leaders.

But according to one of America's top military analysts, governments in the US and UK are already being briefed by their own military strategists about how to prepare for a world of mass famine, floods of refugees and even nuclear conflicts over resources.

Gwynne Dyer is a military analyst and author who served in three navies and has held academic posts at the Royal Military College at Sandhurst and at Oxford.

Speaking about his latest book, Climate Wars, he says there is a sense of suppressed panic from the scientists and military leaders.

...In Climate Wars, even the most hopeful scenarios about the impact of climate change have hundreds of millions of people dying of starvation, mass displacement of people and conflict between countries competing for basic resources like water.

Russia understands that power in a large swath of the world — Europe, the former Soviet Union and parts of the Middle East — can be exerted from control of oil and natural gas pipelines. That’s how the U.S. has inserted its power into Russia’s backyard — through the Baku-Ceyhan oil pipeline that crosses the country of today’s conflict, Georgia. Now, Vladimir Putin intends to build on Russia’s restored power by erecting two gigantic new natural gas pipelines into Europe, which already relies on Russia for almost a third of its gas.

Here’s where the Achilles Heel comes in. One of these pipelines — South Stream — would pass through nations like Bulgaria, Hungary, Serbia and Austria. These are countries in which the U.S. has influence.

CARACAS (Reuters) - Venezuela is advancing in talks with U.S. oil giant ConocoPhillips and will meet with the company next week to discuss the 2007 nationalization of its assets, a Venezuelan official said on Monday.

Conoco has filed arbitration proceedings against Venezuela for last year's nationalization of heavy oil projects in the Orinoco Belt, but has maintained simultaneous discussions to reach an out-of-court compensation settlement.

This is Arcosanti, 70 miles from Phoenix, Arizona. It's a curious taste of what an environmentally friendly US town could look like, but probably never will. It was designed by Paolo Soleri, an Italian-born architect, who originally came to Arizona to work for Frank Lloyd Wright, but soon set off on his own idiosyncratic path. Soleri is a genuine visionary architect. In the early 1970s, his designs and fantastical writings made him a big-hitter in architectural circles, up there with other postwar sci-fi modernists such as Buckminster Fuller. Then he all but disappeared, becoming, for the past 30 years, little more than an obscure curiosity. Yet today, as the world wakes up to the grim realities of climate change, peak oil and sustainability, Soleri's path looks less idiosyncratic. In fact, he's now something of a guru: in demand on the lecture circuit and, recently, offering sage advice in Leonardo DiCaprio's "how can we save the world?" documentary The 11th Hour.

(Bloomberg) -- Devon Energy Corp. and Anadarko Petroleum Corp. were among a dozen oil companies that should be reimbursed more than $1 billion they paid the U.S. for leases to drill off the California coast, an appeals court ruled today.

The companies or their predecessors bought three dozen leases from 1968 to 1984 to explore for and develop oil and gas resources in the outer continental shelf off California. Laws passed by Congress to limit energy production near U.S. coastlines violated the lease terms, the U.S. Court of Federal Claims ruled in a 2002 lawsuit.

MOSCOW (Reuters) - Russia's parliament unanimously approved resolutions on Monday calling for the recognition of two rebel regions of Georgia as independent states, a move likely to worsen already strained relations with the West.

Both houses of parliament, which are controlled by Kremlin loyalists, swiftly approved non-binding resolutions calling on President Dmitry Medvedev to recognise the pro-Moscow breakaway regions of South Ossetia and Abkhazia.

About 75% of fertilizers and fertilizer technology used around the world today were developed or improved during the 1950s to 1970s by scientists and engineers at the Tennessee Valley Authority (TVA) in the United States, says John Shields, a former TVA official. Shields is now Interim Director of IFDC, An International Center for Soil Fertility and Agricultural Development, based in Muscle Shoals, Alabama.

"An investment of $41 million in fertilizer research through 1981 returned an incredible $57 billion to U.S. agriculture," Shields says. "That doesn't include benefits of the technology to the rest of the world."

But inadequate public funding caused closure of the TVA fertilizer research program in the early 1990s. Today, publicly funded fertilizer research and development has essentially ceased—and so has the flow of new and more efficient fertilizers and fertilizer manufacturing technologies.

TEHRAN (Reuters) - Iran has launched a submarine production line to ensure its forces are equipped to maintain security in the vital oil shipping route, the Strait of Hormuz waterway, the defence minister said on Monday.

Unlike the oil ‘shocks’ of the 1970s, the current energy crisis is almost certain to be long-lasting. None of the quick fixes proposed by pundits and politicians – drilling in protected wilderness and maritime areas, curbs on commodity speculators, pressure on members of Opec to increase output – is likely to have much impact. In 1973-74 and again in 1979-80, events in the Middle East led to a sharp reduction in the flow of oil from the Persian Gulf, causing a contraction in global supplies and a rise in energy prices, and thus sparking a global recession. But when equilibrium of a sort was restored to the region, the oil began to flow again and the crisis passed. Now, however, the imbalance between supply and demand is largely due to factors inherent in oil commerce itself – and so is less easily solved.

“The world now has a precariously balanced oil market that cannot withstand any meaningful oil supply disruptions without significantly higher oil price implications,” warns a new report from Raymond James & Associates, the investment banking firm.

Coal production in China has more than doubled over the last seven years, reversing the decline seen from 1996 to 2000. In 2007, China consumed 2.9 billion short tons of coal, representing more than one third of the world total. As you might have guessed, this makes it both the world’s largest consumer and producer of coal.

Even though internal demand has been skyrocketing, China has been able to dig into its massive coal reserves and remain a coal exporter – until last year. In 2007, China’s growth finally outpaced its ability to produce, making it a net importer of coal.

KUWAIT — OPEC-member Kuwait is pumping around 2.5 million barrels per day (bpd) of crude oil and aims to boost capacity to 3 million bpd in the first half of 2009, a top oil official said on Monday.

The world's seventh-largest oil producer is sticking to the production target of 2.53 million bpd set by the Organization of the Petroleum Exporting Countries (OPEC) and has about 200,000 bpd to 300,000 bpd of spare capacity, said Saad al-Shuwaib, the chief executive of state oil firm Kuwait Petroleum Corp (KPC).

TEHRAN (Reuters) - Iran's oil minister said on Monday he expected OPEC to work on preventing the falling trend in crude prices and would also study oversupply in the market, the oil ministry's news website, SHANA, reported.

'It seems that OPEC's member states are intending to prevent the declining trend in oil prices,' Oil Minister Gholamhossein Nozari was quoted as saying about the September meeting of the Organization of the Petroleum Exporting Countries.

CAPE TOWN — Venezuelan President Hugo Chavez is expected to sign a bilateral energy agreement with South Africa next week paving the way for state-owned oil company PetroSA to acquire an oil-producing asset in Venezuela.

(Bloomberg) -- Petroleo Brasileiro SA, Brazil's state-controlled oil company, fell the most in a week in Sao Paulo trading after Itau Corretora said the government is likely to raise taxes on existing oil concessions in the so-called pre- salt fields once production begins.

STAVANGER, Norway (Reuters) - Oil-rich Norway is pushing ahead with plans to use part of its $400 billion sovereign wealth fund to invest in renewable energy development, a deputy finance minister said on Monday.

To counter rising fuel prices, a group of Catholic and Protestant Churches in southern Germany has set up its own one of a kind non-profit energy company to supply gas to parishes and charitable institutions.

KNOXVILLE — TVA electricity rates will jump another 20 percent in October, a move Tennessee Valley Authority officials say is necessary to absorb more than $2 billion of increased costs for coal, natural gas and purchased power in the next year.

TVA directors approved a $12.6 billion budget Wednesday that includes its biggest single-rate increase in more than three decades, reflecting both a fuel-cost adjustment and an increase in TVA’s base rates.

“Food is essential to daily life,” says Ashley Atkinson, director of urban agriculture for the Greening of Detroit, which started in 1989 as a reforesting program for the city’s neighborhoods, boulevards, and parks.

Today, with 25 percent of the land in the city vacant due to the removal of many residential and commercial buildings, Ms. Atkinson has been instrumental in developing gardening and youth education programs to help stabilize and redevelop neighborhoods.

TEHRAN (FNA)- Iran is likely to cut crude exports to some global buyers in a bid to increase sales to China and India, an Iranian oil official said.

"China and India have growing economies and it is completely clear that they need more energy resources," the head of International Affairs department of the National Iranian Oil Company (NIOC), Ali Asgar Arshi, said.

"We will open offices in Bombay and Beijing where they will be concentrating on contracts with the purpose of increasing the crude oil sale. If the levels of oil sale to these countries increase then oil sales to certain other countries will fall and supply to the free market would, also, decrease," he added.

Despite the widespread criticism of McCain's claims about drilling, his proposal seems to have lifted him in the polls. Members of the peak oil movement take note! Gloomy Gusses have a hard time elevating dopamine levels in people. For the few who will listen, careful explanation and credible evidence will overcome those increased dopamine levels and provide appropriate perspective on these dubious claims. But when it comes to mass communication with millions who are barely paying attention, promises of relief will get the pleasure centers going even without anyone actually delivering that relief. And, if McCain gets elected, he might very well be forgiven when he can't deliver on his promise just as Harold Hill was. But, of course, McCain provided some uplift when people needed it. That will seem more important to many compared to his incompetence when it comes to energy policy.

The lesson is this: Those intent on spreading the truth about our oil predicament will need to study Harold Hill's techniques which are widely used by the likes of Daniel Yergin and other oil optimists. With brain chemistry working against you, it won't be easy to figure out how to counter them.

The price of asphalt, which is mixed with stone or gravel to form blacktop, has nearly doubled since the start of the year. That has translated into a near doubling of the price area pavers pay for blacktop.

For the first time that longtime buyers like Lancaster Highway Superintendent Richard L. Reese Jr. can remember, it also translated into a shortage of blacktop.

“I’ve been here 11 years, and there was never a problem with me calling up a day in advance and saying, ‘I need a ton of material,’ ” he said.

But for about three weeks last month and early this month, area suppliers rationed the amount provided to Reese and other blacktop buyers.

Who could have ever predicted the price of gasoline surpassing the $4 per gallon mark? No one, until maybe just recently, that is. Are $5 per gallon petrol prices just around the corner?

Due to mushrooming population numbers, worldwide oil demand continues upward even though supplies are trending oppositely. What we’re all now facing and feeling is the effect of this dichotomy and it hurts. Everyone should be aware it doesn’t need to be this way. It really doesn’t.

Transportation and public transit advancements in the New Orleans metropolitan area will be slow to come by as one major factor — money — is lacking.

Fears over fuel price increases and Americans’ growing awareness of the country’s dependence on a finite energy resource has many citizens nationwide examining their gasoline usage. Some have flocked to public transit, joined carpools, decided to drive less or made no changes at all.

With very limited public transit options in the New Orleans area, particularly after Katrina, are state, city and regional transportation officials strategizing for transportation infrastructure of the future?

(Bloomberg) -- PTC India Ltd. plans to start importing coal to supply power stations in return for electricity to defend its position as the nation's biggest energy trader.

PTC has agreed to supply 1.5 million metric tons of coal by December 2009, Chairman T.N. Thakur said in an interview in New Delhi. The company plans to invest in mines in Indonesia and India to secure as much as 15 million tons, equivalent to three- quarters of India's annual imports, he said.

All diesel thermal generators will be phased out with effect from next month (September) as government battles the power shortage that has led to endless load shedding. The government can no longer afford to run the expensive generators, which have apparently not created any impact as far as bridging the power supply gap is concerned.

Worldwide fertilizer crisis is getting worse, with no sign of dramatic resolution to this crisis or downwards trend of the price of fertilizer. Even severl months back, price of each ton of Urea was below US$ 400, but now, anywhere in the world, it is above US$ 600 [of course FOB price]. Various large stock holders are offering Urea to potential customers at the rate of US$ 700-720 per ton, while there are some fake suppliers, who wish to cash the letter of credit and disappear. Thos fake suppliers are offering FOB price of Urea at US$ 200-250 per ton. Meanwhile, taking the advantage of global crisis of fertilizer these rackets have cashed a few hundred million dollars already by befooling the customers. Reality is, any company offering Urea at price below US$ 500 for FOB are simply frauds. They are not suppliers indeed.

Here we have some very recent news from the South Asian nations on how fertilizer crisis is creating series of serious problems...

Every time you fill your gas tank, you're participating in what Texas oilman T. Boone Pickens describes as “the largest transfer of wealth in the history of mankind.”

On average nationwide, roughly 38 percent of the cost of gasoline is tied to foreign-produced petroleum. Every time Americans spend $50 at the pump, they're sending about $19 abroad.

From January through June, the United States spent $172 billion on crude-oil imports, compared with $103 billion in the first half of 2007. Many economists describe that money as a “foreign tax” on the U.S. economy, because much of it goes directly into state-owned oil monopolies or government coffers.

Not only does every other Arctic nation know that the melting ice caps are opening up new resources in these waters, but they all have done at least something about it, staking their claim in some way to what many believe is an economic treasure chest of energy reserves. That is, every nation except the United States.
Shockingly, the United States remains the only major industrialized nation that has not signed the Law of the Sea treaty. As a result, we do not have a seat at the table, or a say in other nations' efforts to extend their continental boundaries in the Arctic and elsewhere. This prevents us from laying a legitimate claim to our share of valuable resources. And despite an unprecedented level of diverse bipartisan support to sign this treaty, the United States still can't seem to commit.

Consultancy Fundelec knows Argentina's power business like no other. The power consultancy's monthly report on the country's energy sector is hotly anticipated in the industry, especially now Argentina is suffering an energy crisis.

The latest issue showed the country saw new record power demand in the month of June. The news came as Argentina's government said it was ready to increase regulated rates 20%. Local press has also reported the country will spend 2% of its GDP to subsidize cheap energy in the country.

To solve our energy crisis, we need to do a systems engineering approach, as we did with Apollo, and develop all of these resources and systems. Unlike the Apollo moon project, which depended on all systems coming together and functioning simultaneously, the systems needed to solve our energy crisis can come into play at different times.

DENVER -- Mayor John Hickenlooper, who kicked off a free-bicycle program at the Democratic National Convention by leading a ride through the city's downtown Sunday, said he knows Denver has a long way to go before it matches Portland's bike culture.

However, Hickenlooper boasted to a visiting Portlander, "Someday, we're going to catch you because we have 300 days of sunshine a year," hundreds of miles of bike trails and a city government newly determined to encourage people to bike.

Colorado’s $23 billion-a-year oil and gas industry is keeping the state’s economy afloat, but Governor Bill Ritter and his fellow Democrats are promoting new rules and tax hikes that would drive business elsewhere. As the Democrats descend on Denver for their convention, John McCain should be drawing attention to Ritter’s wrongheaded policies. They exemplify the Democrats’ reflexive opposition to domestic energy exploration and present a great target for McCain to exploit.

MEXICO CITY (Reuters) - A key Mexican opposition party scrapped an internal ban against private investment in the state-run oil business, moving lawmakers closer to approving a government plan to overhaul the energy sector.

Hawaii isn't alone. Many are battling with the questions ahead this season. Will the high cost of travel not only break the budgets of schools, but also leave behind fans who just can't afford the rising bill to travel from state to state to cheer on their favorite teams?

RIYADH – There is an abundant supply of diesel fuel and there was no cause of concern on the issue, Engineer Ahmed Bin Abdul Rahman Al-Saadi, Executive Director for Distribution and Ports Works in Saudi Aramco, said here Sunday.

Diesel fuel is available at all Aramco petroleum products distribution stations in the Kingdom, he said. “The company has not reduced quotas for authorized clients.”

He said the shortage in supplies of diesel fuel at gas stations on Riyadh-Taif Expressway has been taken care of as the company has boosted its supplies to Northern Riyadh by transporting additional quantities of different petroleum products from other nearby distribution stations, the Saudi Press agency (SPA) said.

From the early 1990s, Beijing started progressively liberalizing the prices of primary energy products, such as coal and crude oil, allowing the prices of some output to be determined by market forces. However, it maintained tight control over end-user prices for oil products and electricity, to protect households, farmers and state-owned companies.

CHIANG MAI - As Mekong River floodwaters in Laos and Thailand recede, indignation with China for its lack of transparency on upstream dam developments is on the rise. China has recently pursued a friendly policy of economic integration with Southeast Asian neighbors but in relation to Mekong River development it has taken what many see as a covetous and less than neighborly approach.

A geopolitical convulsion measuring six points on the Richter scale is bound to produce aftershocks. The reverberations of the conflict in the Caucasus are beginning to be felt. We may be unwittingly bidding farewell to the "war on terror". In any case, the international community has lost interest in Osama bin Laden.

The United States has spotted a promising new enemy on the horizon and an engrossing war may be offering itself, with infinite possibilities.

Common laws of mathematics and economics tell us that increasing demand and diminishing supply means rising prices. Yet analysts call tops on black gold fairly frequently since the recent bull run started in 1999. Oil has been exhibiting a pattern of two steps forward and one step backwards, leaving the larger bullish trend intact.

Thanks to a new technology for extracting natural gas trapped in shale, US domestic gas production has recently boomed: up 8.8% in January-May versus last year, the largest increase in roughly 50 years. Consequently, natural gas prices have fallen far more than those of oil and other supply-constrained commodities: down 42% since early July.

This, of course, is exactly what some observers expect to happen with oil once new extraction technologies are brought to bear--in contrast to the position taken by the peak-oil crowd. Even if it doesn't, however, the gas trends could help ease the energy crisis.

TEHRAN (AFP) - Iran might for the first time offer production sharing contracts to develop its Caspian Sea oil fields, in a bid to attract foreign investors to a region with high exploration costs, a report said on Monday.

It's time either to get serious about developing alternatives to fossil fuels or to make nice with the government entities that now control most of the world's oil supplies and are reluctant or simply unable to develop them.

I understand why oil, for instance, is (or at least was) going up; be it because of speculators, supply/demand, or whatever… I get that, even if peak oil isn’t right, there is no doubt that at some point there will be less oil available than there is now. Oil, however, is an input commodity; gold, while pretty and shiny, doesn’t have a significant practical demand. Huge amounts of gold are produced, and I just don’t get where it all goes, except into storage via things like GLD and around Michael Phelps’ neck.

The second astounding part of the film - to me - is its lack of virtually any reference to oil as a problem, other than in general terms as contributing toward the trade deficit. But there is no mention of the impending Peak Oil problem. The fact that at the same time that Social Security turns cash flow negative in 2015 the country will also be fighting the gigantic problems caused by Peak Oil (which looks to be here sometime in the 2010 - 2012 time frame) is perhaps too much reality even for this film to contemplate. Or maybe Peterson does not understand Peak Oil. But for those of us who are focused on the impact of Peak Oil, the meaning of Peterson’s film is even more trenchant.

I agree that we must utilize all possible supplies of oil and gas, but it will be like pissing in the ocean. We must accept the fact that worldwide oil production has peaked and will inevitably decline over the long-term. New supplies will be discovered, but they will not be enough to replace the supplies being used. Matt Simmons, the man who put forth the Peak Oil concept many years ago and author of Twilight in the Desert – The Coming Saudi Oil Shock & the World Economy, is warning that we must act now or the inevitable decline in oil supply will lead to World War III over resources. This is not as far fetched as it sounds. When industries must shut down and gasoline rationed, anger will rise. Countries will use their military to acquire the precious remaining supplies.

Other state and local governments across America, including New Mexico, Virginia, and Washington, are also following suit - hoping to conserve energy, reduce fuel consumption, and alleviate congestion.

The federal government also wants to put its weight behind this four-day work week bandwagon.

LOS ANGELES (Reuters) - Hydrogen fuel cell cars from nine automakers completed a 13-day cross-country trip this weekend, in the first such mass U.S. crossing for vehicles powered by a zero-emission technology still in its infancy.

STOCKHOLM (AFP) — Burgeoning demand for food to feed the world's swelling population, coupled with increased use of biomass as fuel is putting a serious strain on global water reserves, experts said

"If we look at how much more water we will need for food and how much more for biomass for energy going forward ... it is quite worrying," said Jan Lundqvist, who heads the scientific programme at the Stockholm International Water Institute (SIWI).

Global food needs are expected to roughly double by 2050, at the same time as climate change and dwindling oil reserves are pressuring countries to set aside ever more land for producing biomass to replace greenhouse gas-emitting fossil fuels.

Logically, if the obsession with growth at all costs has increased emissions to the point where rising temperatures pose a threat to mankind's existence (as many experts believe) then a prolonged period of slow or negative growth will limit the damage to the environment. At the very least, it would provide a breathing space to come up with an international agreement on how to tackle the problem.

People still claim global warming is a threat when the earth is now in a decade old cooling cycle. Many forget the passage in Genesis (8:21) when God told Noah after the flood, “Never again will I doom the earth because of man…”

Natural gas production in the Lower 48 States has seen a large upward shift. After 9 years of no net growth through 2006, an upward trend began that generated 3% growth between first-quarter 2006 and first-quarter 2007, followed by an exceptionally large 9% increase between first-quarter 2007 and first-quarter 2008.

and

The large recent increases in supply came from across the Lower 48 States. But, more than half of the increase in natural gas production between the first quarter of 2007 and the first quarter of 2008 came from Texas, where supplies grew by an exceptionally high 15%.

I had pointed out that production figures from the Texas Railroad Commission were not consistent with that report, at which point you and others offered commentary and evidence discrediting the Texas Railroad Commission figures. Your concluding comment was as follows:

I think you are fighting an uphill battle trying to match natural gas numbers between sources, without doing a lot of background work to make certain that the numbers you are using are comparable. It is very easy to make a mistake. At a minimum, you want to go back to the EIA tables and start working from them. Then you at least know what number you are actually working with.

Well I decided to take up that challenge. And guess what I found? What I found were internal inconsistencies in EIA's own figures which call into doubt the validity of this report. (Caveat: Despite these inconsistencies, EIA surveys using sources other than well operators indicate gas production to nevertheless be on the increase, just not to the extent that the aforementioned report indicates. According to Baker Hughes, the number of rigs working in the U.S. has soared from an average of 831 in FY2002 to a current August count of 1968. Eighty percent of these are searching for natural gas. And according to various EIA surveys, all this added drilling activity appears to be bearing fruit. If recent trends in production vs. consumption as reported by the EIA continue, gas prices could be in for some pretty rough sailing in the days and months ahead.)

Now on to the task at hand.

Upon exiting the wellhead, natural gas passes through several hands before it winds up in your furnace. First, well operators sell the wet gas to natural gas plants. These plants strip out the liquids, non-hydrocarbon gasses and other contaminents. An excellent and informative discussion of what these plants do can be found here...

When I look at this data, I see red flags going up all over the place. To begin with, in 2007 there was a difference of 3.6 BCFPD between Dry Gas Production calculated using well operators’ & gas plant operators' surveys vs. Dry Gas Production calculated using pipeline companies' & distributors' surveys. How can this be explained? But more disturbing is the rapid increase in this difference from 3.6 BCFPD in 2007 to 4.7 BCFPD in 2008. But for me the most disturbing occurance is that this increase would have been even greater if not for the rapid increases in Well Operator Losses and Gas Plant Losses. Here's what those look like on a monthly basis since the beginning of 2007:

As you can see, Well Operator Losses, derived from monthly surveys of well operators, are increasing exponentially—for a whopping 52% increase over the last 17 months. According to the EIA, these include gas re-injected into the reservior, gas used for lease fuel and gas vented or flared. How can these balooning Well Operator Losses be explained?

Gas Plant Losses, derived from annual surveys of gas plant operators, have also increased, although not as markedly as Well Operator Losses. According to the EIA, these include gas used for plant fuel, non-hydrocarbon gases removed, NGL extraction losses and gas vented or flared.

There is little doubt that the United States is in the midst of a Don Quixote moment, and if recent events have shown us anything, it is that when dealing with these government-generated data series a healthy dose of skepticism is in order. People are slowly waking up to the fact that they are just as frequently driven by politics as they are by empiricism. Barry Ritholtz had a nice post about the problem on Saturday’s Big Picture and, upon reading it, one can see how neatly the recent EIA natual gas statistics fit into this larger framework of “Happy Days are Here Again”:

No compromise: Its either one or the other.

If you believe that inflation has been (at least until recently) contained, and that unemployment has been modest, and that growth was robust, well then, you are in the same camp as Phil Gramm, Amity Shlaes, Gerry Bowyers, Larry Kudlow and the Las Vegas Sands. The stock market -- still less than a year, and less than 20%, from all time highs -- is in this camp also. All of you therefore believe that the economy is mostly fine, and the public are a bunch of whiny bitches.

Or, you might suspect that something fishy is going on. That the public simply does not get this negative for no damned good reason, that we do not see sentiment levels down to 28 years lows on a whim. That much of the recent economic progress has been illusory, dependent upon credit, easy money, and reckless risk taking. That the official data has been monkeyed around with enough over the past decades that it simply fails to do what it purports to do.

And as if that wasn’t enough, from Saturday’s Drumbeat we get one of the industry’s principal talking points articulated by one of its most outspoken advocates—here, straight from the horse’s mouth:

"It's almost divine intervention," said Aubrey McClendon, chairman and chief executive of Chesapeake Energy, a major natural gas producer in the United States. "Right at the time oil prices are skyrocketing, we're struggling with the economy, we're concerned about global warming, and national security threats remain intense. We wake up and we've got this abundance of natural gas around us."

Engaño. The substitution of illusion for reality. The Great and magnificent Oz!

But the Dr. Coue formula doesn’t always work. And if anyone doubts the perfidiousness of some of these oil executives (the archetypes being Bush and Cheney), their cleverness, or the way the mainstream media has become little more than their handmaiden, working hand-in-glove with them to pass illusion off for reality, they should take a look at this:

The believers in the EIA gas production figures still have to reconcile them with the behavior of the market. Even after their roller coaster ride during the first seven months of this year, with prices shooting up to over $13 per MMBtu, Henry Hub spot price closed Friday at $7.98 per MMBtu. That's still 26% higher than the $6.23 it averaged in August of 2007.

Is that what happens to the price of a commodity whose production has shot up by 9% while consumption has increased by only 3%?

Or are the illusionists right--that reality has become irrelevant--as the author of this Time article, posted on last week’s Drumbeat, asserts?

Prices in the futures market — and, indeed, any real-life market on a standardized good — do not form where actual supply meets actual demand; they form where perceived supply meets perceived demand.

Yes, a 26% price increase may result from a 9% increase in domestic production (bearish) is counteracted by the bullish factors of increased consumption (by 3%, almost half of the domestic increase, as US produces ~85% of natgas it uses [1.09*.85 = 7.65%]), lower M from Canada as their production stagnates, and lower LNG M (by 50%) as prices are higher in Europe and Asia. The future of natural gas is very interesting -- and I'm glad they are increasing production while oil struggles -- natural gas burns much cleaner for our climate and air quality.

I don't want to get too far into Tinfoil Hat Land, but I have speculated that Saudi Arabia is curtailing domestic refinery runs in order to boot reported crude exports, and we do have recurring reports of refined product shortages in Saudi Arabia. They may have planned to boost product imports, but they were not able to buy all of the volume that they needed. The premise is that an effort is being made to make energy supplies appear to be larger than they actually are, in order to boost the chances of the Neocons staying in power.

In any case, a natural gas guy once told me that--because of the inability to move any significant amount of gas overseas--the difference between a natural gas glut and a shortage is about 2%.

Edit: I have borrowed an item from "Atlas Shrugged" regarding public statements about energy supplies (at one point in "AS" Rand wrote that one could discern the truth by assuming the opposite of what was printed in newspapers). In any case, my Assume The Opposite Theory is that one should generally assume the opposite of what public officials are saying about energy supplies. Note the following headline, linked uptop:

"No diesel shortage, says Aramco official"

BTW, anyone find it interesting that Aramco was forced to issue a denial?

westexas "The premise is that an effort is being made to make energy supplies appear to be larger than they actually are, in order to boost the chances of the Neocons staying in power."

I do not get this. All I see and read is that the Republicans (Neocons, unless you can name some Dem Neocons) have no chance of winning - UNLESS, they can convince the population that there is an energy crisis and that we need to do everything (ANWR, outer continental shelf, nuclear, shale, wind, solar, biofuel, etc). Most Dems oppose everything except wind, solar and biofuel. So, if voters are convinced that we need more than that, they will vote for politicians who promise to do more.

If the Republicans were trying to make suppies apprear to be larger, this would defeat their only chance - creating the illusion of no urgency for drilling and nuclear. Unless you are saying they are trying to lose big time.

I believe that Neocon refers to the fact that Republicans are no longer conservative. Conservative in my book lies somewhere between the current crop of Republicans and Libertarians. I would argue that many Democrats could be described as neocrats as well, with their pandering to corporate interests.

Agree. The grandfather of Neo-Con is Woodrow Wilson and the Neo-liberals. It has now all collapsed into a corporate kleptocracy -- I suppose you could call it "neo-fascist", but that label has uncomfortable historical and emotional overtones that obscure the reality of what is going on.

The point is to maintain the facade of our happy motoring lifestyle - to maintain Business As Usual. It's not even deliberate all the time - often those promoting it cannot even conceive of another paradigm. Therefore they will see and interpret everything to fit their worldview. No matter if facts are contradictory; they will proclaim them as congruent.

The premise is that an effort is being made to make energy supplies appear to be larger than they actually are, in order to boost the chances of the Neocons staying in power.

A very conservative person I know thinks what is happening is just the opposite. She thinks liberals control the country and are manipulating the economy and oil supply to defeat the Republicans and that after the election the economy will get better because it has been so well managed for the past eight years. I am pretty sure that's what the Limbaugh right thinks. They think of themselves as the exploited under dogs.

And there you have it... The final and concluding evidence that money and brains in the U.S. exist in two completely exclusive universes. If ever there was any question to the modern physics theory that multiple universes exists, we may define this moment - as in others - as the "Synchronous Limbaugh Inverse Mult-Universe Event" (SLIME).

Anyone care to build the goobly-gook, phoney-baloney scientific definition of the SLIME?

Said by Middle East News:
Engineer Ahmed Bin Abdul Rahman Al-Saadi, Executive Director for Distribution and Ports Works in Saudi Aramco, said...

Diesel fuel is available at all Aramco petroleum products distribution stations in the Kingdom, he said. “The company has not reduced quotas for authorized clients.”

Al-Saadi said to prevent the occurrence of a shortage in supplies, Saudi Aramco has chalked out a plan to guarantee abundance of products for all consumers in Riyadh Region.

The title, "No Diesel Shortage, says Aramco Official," of the HTML page was written by someone in Middle East News, not Saudi Aramco. The statement by Aramco is consistant with a reduction in diesel fuel for "unauthorized clients" which could mean anyone. Apparently all cities in Saudi Arabia will be short-changed except ones near the capitol.

Superb analysis. You seem to be another on the list of commentators here who have spotted many recent anomolies/discrepancies in EIA figures.

I would like to add to your theory and say the peak oil movement is under a strong rear assault and the powers that be are really starting to panic that the message is getting out there.

The analysis here is on this site is far superior in both depth, qaulity AND qauntity to any analysis done by paid organisations so obviously we do pose a serious threat to those that have vested interests in us being "wrong"

The analysis here is on this site is far superior in both depth, qaulity AND qauntity to any analysis done by paid organisations so obviously we do pose a serious threat to those that have vested interests in us being "wrong"

When one sees the sort of item produced by the neocon screedsheet The National Review, "Out of Energy" linked up top, one is forcerd to think. The item's point is those dirty words taxes and regulations, and suggests the energy business should up and leave Colorado for other pastures: "Governor Bill Ritter and his fellow Democrats are promoting new rules and tax hikes that would drive business elsewhere." What's rather funny is that Colorado is where the energy is, not Delaware, or Nevada, or some other supposedly "business friendly" state. By their mantra, the hydrocarbon business ought to center its drill bits on the Cayman Islands and other similar off-shore tax havens since the "business environment" is more hospitible.

Downsouth: Dont be so cynical...you know that the
"OIL REVENUES WILL PAY FOR THE WAR"
Iam shaking my Al Franken (Lies and the lying liars who
tell them) book in anger after I read your comments.
(cynical sarcasm) off

Manipulation of perception is clearly the most important mover of markets. I don't think that reality really bites until people are actually hungry and cold. The only possible shared reality is scarcity, and at least in the USA, we aren't there -- except for a carefully hidden underclass.

I am so thankful for Gail and all the rest of the OilDrum staffers, but when I look around me, I see that the "shared reality" is actually created by Disney, Monsanto, BP, etc.

Last night I saw Wall-E (first time for me, but this was a re-run house, where you can sit on couches and drink beer and eat pizza), and I observed that people became all teary and emotional about the fate of a cartoon creature in a constructed universe. The obvious attempt to create a false emotional state made me angry, not tearful -- but the creators of the film did succeed in producing an emotional response in me.

This has got to be the most ridiculous statement I have heard in a long time! If we were to anesthetise our feelings from novels, stories, films, works of art, plays, dramas etc... we would basically render the entire lot pointless. The whole point is to induce an emotional feeling. if the writer/painter etc..could not induce a emotional response in you then he/she has failed in her job!

I understand you want to make analogy to the psycology of markets but this really is a garbage analogy!!

Of course one purpose of art is to manipulate other people's emotional state -- otherwise, it wouldn't be art. I can understand that. That's why politics is called an "art", I suppose.

But it is also clear to me that people can be manipulated into believing someone else's reality -- that's what religion and economics is all about.

Some of the detractors of TOD are trying to make the case that "Peak Oil" is just a sham, and people are being stampeded into paying high prices for something that should be cheaper. The proponents are trying to make the case that the data is "real", that oil is increasingly scarce, and the price can only go up for very fundamental reasons. The market manipulators take advantage of the confusion to make profits where they can. That isn't illegal, probably not even "wrong" --

I understand that life is a gamble, and that people relate to each other through deception. I am just thankful for TOD that at least documents it's sources and tries to construct an objective reality.

at least documents it's sources and tries to construct an objective reality

100% behind you on that!

If you think that [detractors of this site] are trying to discredit us now, wait till they are really backed into a corner! I think the propaganda agaist us has only just begun - primarily becasue we are just satrting to get (serious) mainstream attention.

Perhaps Peak Oil is having its ethanol moment. Peak Oil is now widely mentioned and discussed with its implications starting to sink in.

Some of the implications are very negative for powerful industries and people. And they have the resources to fund "studies" and publish anti Peak Oil propaganda.

The same thing happened to ethanol earlier this year with the Grocery Manufacturers organized opposition and the chicken lobby getting Gov. Perry of Texas to file mandate objections with the EPA.

Also, to my mind EROEI "studies" are clearly fallacious and misleading in that they omit critical factors in judging alternative energy sources. Nonetheless they are widely believed and distributed as objective even on this site.

Expect the same thing as Peak Oil's effects start to hurt the rich and powerful. By this I mean false data accompanied by false red herring arguments such as corn ethanol is causing starvation of babies in poor countries.

Some clever propagandist may be able to spin Peak Oil into some sinister plot to destroy the country. You never know. The invasion of Iraq was sold as necessary to stop Saddam from getting WMD which he would use in the service of Al Qaeda after all.

Nearly the whole Congress bought it and so did the majority of Americans. And we are still paying the price for it going on six years later.

The only problem with your hypothesis is that studies of EROEI began back in the 1970's. The analytical effort was left in the dust as oil prices fell during the mid 1980's. those "studies" you refer were usually the result of continued efforts in the academic world, far from main stream media. Of course, some people will take the studies and put a political spin on their work. That's not to fault the analysis, only the later presentation.

Marco: I think if the art or book or what ever medium
is garbage,then the emotional response out, will be
garbage also (GIGO)
You are correct when you muse that detractors will most certainly assault a place with the unmitigated gaul to tell the truth...or search for it. I can assure you it will manifest itself from both ends.
The attack will be from the top and from the bottom
This will allow those nefarious individuals to control
the debate and movement altogether.The people who
would wish to do this, have a modus operandi and never
deviate from it.
Their motto is (BY WAY OF DECEPTION WE WAGE WAR)
I have seen untold number of movements infiltrated by
them and severe damage done to the cause was always
the result.
Dont bother asking me who "THEY" or "THEM" are,if you
arent aware already,you wouldnt believe me anyhow.
As an aside...I had a emotional response to George
Orwells 1984....because I saw so much truth in the
fictional account. I actually repurchased several yrs
ago and reread it also.

NeverLNG;
Instead of Wall-E, which I haven't seen yet, try to consider your point using say, 2001 and the HAL 9000 instead, or Moby Dick. There's a good reason we've got fictional storytelling. It's not about facts, its about looking at patterns, including those around personality and psychology, since these affect pretty much all of our choices, no matter how rational we want to see ourselves.

Sometimes it is fair to call it Manipulation and Deception, but too often that implies that it's just the Author somehow coercing the audience. When it works and when it's good, the audience (or electorate) is an active part of it, and is applying relevant meanings to these make-believe characters and events.

Yes, I don't dispute that there's a difference.. I was just trying to say that the problem isn't one of people getting an emotional connection to fiction itself. That's empathy. But even with mainstream pop art, there's a difference between trying to create an emotional response, which might play to some as cheap melodrama or cliche'd passion, and doing so to intentionally and covertly mislead.

As you indicate, there is surely no shortage of that kind of cynical manipulation in advertising, politics and so on.. but I don't see anything essentially wrong about- "people [becoming] all teary and emotional about the fate of a cartoon creature in a constructed universe." I still love ET. I don't care what anyone says.. and it didn't make me buy more Reeces Pieces, nor become immune to thinking clearly in the real world. But it WAS both sentimental and escapist, and also a few other things that I think were worth watching {and someone making} that movie for.

I was working on a commercial once, long ago at an animation company, and the Gaffer (lighting dir) from the neighboring soundstage kept coming over to pick through my blue lighting gels. I finally asked what he was trying to do, and he said 'We're filming a talking baking-soda box in a freezer, with magical, sparkly fishies and other smelly foods spinning around his head, and the clients don't really like the blue of the freezer walls, because they think it doesn't look Realistic!'

Occasionally I have seen poeple in real life copy the traits, characteristics, language and even mimicked the behaviour of characters appearing in some sit-coms, soap-operas, weekly shows etc.... and it is quite worrying to see.

Initially, neverLNG, I disregarded your idea but after some more thought I will conceed one aspect of what you are saying (sorry i'm replying to both of you here!): the pervasive nature of some media and it's potential to manipulate populous.

I guess thats why a lot of novels are banned in some countries - as they are seen as negative propaganda by the ruling parties.

But consider-- the thing that allows for civilization to exist is the fact that people can feel empathy for each other, and therefore, can live in groups. And the way that empathy is generated and expressed is by telling stories.

The problem is, that empathy is such a powerful force, and it is apparently so easy to manipulate (e.g., we can empathize with a cartoon bulldozer on a movie screen) that it can be made profitable for a few at the expense of the many.

I'm not arguing that art is bad or empathy is bad -- quite the contrary. But we should call foul when we see it being used for nefarious purposes, such as market manipulation.

"But we should call foul when we see it being used for nefarious purposes, such as market manipulation."

It always is so used. One reason that our "culture" is so "successful" is that it is effortlessly able to co-opt just about any style of art, any political movement, etc. Think of the 60's. Completely de-fanged and turned into fashion.

The problem is, that empathy is such a powerful force, and it is apparently so easy to manipulate (e.g., we can empathize with a cartoon bulldozer on a movie screen) that it can be made profitable for a few at the expense of the many.

The problem is not with empathy, and other emotions being used for art/entertainment. The real problem is that we have significant effort, to use the best possible psychological marketting science, in the service of someones agendas. In the good old days, this wasn't much of a problem, as the efforts were pretty haphazard, and rarely very effective. But now the science -and the scale of the effort, have advanced far beyond the limited resistance education that we have choosen to implement. So now we have a large part of the population not even aware of how they are being manipulated by small numbers of people with commercial, political, or religious agendas.

And to make matters much worse, as a society we seem to have lost interest and respect for truth determination. The combination of the two will almost certainly lead to catastrophic consequences.

So now we have a large part of the population not even aware of how they are being manipulated by small numbers of people with commercial, political, or religious agendas.

And to make matters much worse, as a society we seem to have lost interest and respect for truth determination. The combination of the two will almost certainly lead to catastrophic consequences.

It's been this way for a long, long time. People are born masters at growing blind spots over inconvenient truths.

Each of us here seems to have his own notion of when people were capable of facing truth. For a lot of people on TOD, it's post-WWII America. For others, it's the American War for Independence. Some like The Renaissance. The Roman Empire was a favorite decades ago, but not so much anymore.

To all these people in all these times, the myth of infinite growth was just as sacred as it is today. Romans were just as unaware of peak wood as we are of peak oil. The fact that Revolutionary Americans hunted whales and indigenous peoples to near-extinction remained unspeakable until long after it was all over. Post-WWII America is likely the most extreme example of wealth from spoils of war that the world will ever see. The wealth was so great that it could disguise itself as morality and fool a nation of millions for two generations.

No Chinese I know feels nostalgia for any particular war. There are 5,000 years of it to study - long enough for anyone to conclude that there ain't no such thing as a "good war."

Good work Gail. In my analysis of the publicly available data the EIA is not alone in producing inconsistent statistics.

If we want the data to be better, with a level of quality that actually has some predictive usefulness, maybe we should ask their top management why they allow it?

Presumably the plan is that the US Government uses this data to try and make sensible policy decisions? Is the current data good enough for anybody's needs? If not, shouldn't we lean on the US Government to mandate timely/useful data for everybody's sake?

I have not studied all of this and do not claim to have all of the answers. Perhaps someone involved more in production can comment on why well operator losses and gas plant losses seem to increasing.

I tried to look at the financial statements of Chesapeake Energy and XTO to see if they give any clues as to what is going on. They are two big independent players, and one would expect their production to be rising rapidly in the first half, if the industry did. I didn't find this. For Chesapeake, this is what I found:

Well counts have dropped off, and production in the first half of 2008 is rising at a lower rate than in the second half of 2007. Production per well is rising, though.

With respect to XTO, I wasn't able to find well counts, and I didn't go back as far. I noticed for XTO, there was also a big increase in natural gas production in the second half of 2007 compared to the first half of 2007 (26.6%), but a much smaller increase in the first half of 2008 compared to the last half of 2007 (only 7.2%).

All of this seems sort of strange, if production of unconventional gas is supposedly headed straight up, and these companies are supposed to be leaders.

Nate and I have both talked about problems of the financial sector spilling over into the energy sector, making it more difficult (probably impossible) to borrow more money to keep growth going at a rapid pace. This may already be affecting first half results. Companies will need to be funding growth out of cash flow, and they will need high prices to do this. Eventually this seems likely to affect production, if it hasn't yet.

I think we should be examining closely what is going on with natural gas. Texas data is way behind, so we can't use that to prove anything. It is possible that EIA first half estimates are overstated, even if we can't prove it with Texas data. If other folks have looked at other things, that might be helpful too. I got my numbers by differencing amounts in year end and six month financial statements.

Chesapeake Energy Corporation is the second-largest independent producer and third-largest overall producer of natural gas in the United States.

I suppose Devon is the largest independent producer, and seems like I recall reading somewhere that BP is the largest producer.

It would be interesting if someone could get a list of say the top 20 domestic gas producers and do the exercise you did to see if their gas production increases are consistent with the EIA data, and especially those heavy into the non-conventional gas like Devon, Chesapeake, Carrizo, EOG, Southwestern, etc.

NG prices are falling off a cliff with the most actual price at 7.82. They had been at around 12.50 some 2 months ago. So, it plummeted around 40%!!!
Nevertheless, Chesapeake is slightly up today. From its all time high on 07/02/08 it is down so far by 36%.

I cannot reproduce the problem you describe. The EIA publishes a reconciliation each month. It is shown at this link. It shows exactly how one gets from gross production down to consumption.

The two top categories in the reconciliation are gross production and marketed production. I thought based on what you were saying that marketed production would be falling relative to gross production. This is not the case based on the data:

There are some other small categories, but basically nothing that looks out of line that I can see. I am not sure how you did your calculations, but I think there is at least some possibility that they are incorrect.

The EIA also publishes reports showing how complete the Form 914 data is, and how the monthly natural gas estimates have developed over time. These Excel spreadsheets can be downloaded from this link.

If you download the reports and look at them, you will discover that for Texas, the estimates of the amount of natural gas production have tended to develop upward slightly, as reporting gets more complete. The proportion of Form 914 report that have been received is very high (95.2% for the latest month and 98.4% for the second month back for the 48 states total) at the time the EIA data is published. The procedure they use estimates what is missing, so that production shouldn't be low by the missing reports. Thus, their data is much more complete than the Texas data.

I think there is a possibility that you are comparing apples to oranges, and concluding that the EIA must be wrong. There are a lot of checks and balances in the EIA data, including their published monthly reconciliation of gross production to consumption. This greatly reduces the chance for errors.

If there are some numbers that truly look wrong, I will be happy to talk to the EIA about them. Feel free to e-mail me at GailTverberg at comcast dot net, if you have details that you think would be helpful.

The “Wet” production figures are expressed in Bcfpd and the “Marketed Production” figures are expressed in MMcf per month. So to get the “Marketed Production” figures into the same format as the “Wet” figures you have to divide them by (No. days in month x 1000).

From the EIA’s discussion of their methodology we have this explanation:

Marketed Production Estimated from sample data reported on Form EIA-914
Extraction Loss Derived from data reported on Form EIA-816
Dry Production Marketed Production minus Extraction Loss

Marketed Production=Wet Production – Gas used for reinjection – Gas vented or flared – Gas used as fuel on lease

Gas used for reinjection, gas vented or flared and gas used as fuel on lease I lumped together under the heading of “Well Operator Losses.” EIA doesn’t publish “Well Operator Losses”. What they publish are “Wet” production and “Marketed Production”, both which they say are estimated from the EIA-914 (survey of well operators). Nevertheless, one can solve for Well Operator Losses as follows:

Well Operator Losses = Wet gas production – Marketed gas production

Likewise, the EIA doesn’t publish gas plant extraction losses. What they publish is Dry gas production. But again, one can solve for gas plant losses as follows:

These are the figures I used in my above comment. Getting these various data streams in a format so that they can be compared requires a hell of a lot of number crunching. I don't know why the EIA doesn't use a standard format, either Bcf per day or MMcf per month, so that they can be compared more easily without having to do all that work. Could it be they intentionally want to make it difficult?

I undertook a cursory review of last year’s annual reports of the six largest U.S. drilling contractors in the country--Patterson-UTI Energy, Inc., GreyWolf, Inc., Helmerich & Payne, Inc., Nabors Industries, Ltd., Pioneer Drilling Co. and Unit Corp., who together own about two-thirds of the nations rig fleet.

The cost to hire a drilling rig is an important part, perhaps up to 20%, of the total cost to drill and complete an oil or gas well. There has also been considerable discussion in the media about how the shortage of rigs is hampering exploration and development efforts.

What I found surprised me, because it flies in the face of popular media histrionics.

Evidently the industry has overbuilt:

With approximately 300 non-working rigs currently available in the market there continues to be pressure on daywork dayrates as well as the amount we are able to charge our customers for moving our rigs. As of February 18, 2008, our leading edge rates range from $14,000 to $20,000 per rig day, without fuel or top drives, compared to a range of $15,000 to $22,000 for the same time a year ago.

Source: Grey Wolf 2007 Annual Report

But the industry is hopeful that the glut of rigs will soon work itself out:

On the supply side, we expect a significant decline in the number of new rigs entering the market this year with an expected 50 new entrants, down from 280 in 2007. This should put the supply of rigs in closer balance with demand by year end.

Source: Grey Wolf 2007 Annual Report

I found this table from Patterson's 2007 Annual Report quite interesting. Patterson is the nation's second largest drilling contractor with a fleet of about 350 rigs:

...we [Helmerich & Payne] are not managing the dilemma of carrying a large percentage of old, less capable rigs, while the customer increasingly votes in favor of high efficiency rig offerings.

Too many old legacy assets, often no longer suitable for reinvestment, force our peers into a tradeoff between market share and price discipline. That sounds like the classic prisoner’s dilemma with the logical best choice being price discipline. Since, after all, the market drives demand, contractors have to fight against being reduced in a soft environment and engaging in the downward spiral of rig-on-rig price destruction. This is happening now in the U.S. land drilling market.

Some industry observers have asked why drilling contractors are not exerting more pricing discipline in a market with historically high rig counts. One reason is that truly differentiated performance has driven a segmented marketplace. What we see from our end is existing FlexRigs that were working on the spot market in the last quarter of 2007 still commanding over $25,000 in rig revenue per day on average at 100 percent utilization, while competing rigs were aggressively cutting prices and in the end were still pushed to the sidelines.

Take a look at this last year in terms of margins and activity by comparing the fourth quarter of fiscal 2007 to that of fiscal 2006:
• Our average rig margin per day in the U.S. land market has only
declined by eight percent to $12,221. This daily margin is now 40 percent greater than that of our four largest peers.
• Moreover, our quarterly average number of active rigs increased by
38 percent year-over-year, while that of our four largest peers combined experienced a net reduction of 14 percent.

We have passed the point where competitors can credibly position idle, old equipment as future operating leverage. Back to the prisoner’s dilemma, the next logical exercise in discipline is to permanently remove from the market old industry rigs that are increasingly obsolete, ill-suited, and potentially unsafe in a drilling environment that is becoming more technically demanding.

Great info DS! I'll add a little bit of color to your picture. Given the surge in unconventional gas drilling, especially horizontal drilling, the total rig availability count becomes less a factor compared to the number of rigs companies want for these plays. The new drilling parameters for the unc NG require not only require more horsepower but more sophistication. Top drive capability is a big issue. The increasing daily costs combined with the huge number of potential locations demand the utmost in efficiency. At current drilling costs vs. NG prices companies are feeling a very urgent need to drill as fast as possible. We’ve just got approval to expand our rig count in one unc NG to 14 in 2009. But these rigs will have to conform to company safety standards and efficiency requirements. Thus you’re seeing the onshore drilling business split into two different classes. Not really a big deal but complicates the effort to concepts such as “average rate”, etc.

DS - Your rig report (re: H & P's analysis) is consistent with Matt Simmons, who for several years has said that the oil industry is saddled with a lot of technically obsolete equipment that must be replaced.

One might also consider that these older rigs are obsolete only in the present U.S. drilling situation. I would think that these older rigs would still be useful in other parts of the world where there might still be production possible using the older technology. How long before these rigs are shipped overseas or is that already happening?

Canada's Precision Drilling to buy Grey Wolf of Houston for $2 billion in stock and cash

Maybe no big news but I've got to wonder if Precision might start slipping some Grey wolf rigs north of the border. No specific reason to think this is part of the plan other than certain types of rigs are in demand up there too. We're running a few GW rigs in our shale gas play. Thus that little streak of paranoia

I think you might find the Precision rigs heading south. According to the last quarterly report operating days in Canada dropped. Only the US division saw an increase (and they are a small part of the whole fleet). I think Canada is more depleted that the US. Drilling costs appear enough higher they are suffering at current prices.

From PD second quarter report:

Precision's strategy to diversify into the United States drilling market generated strong revenue and earnings growth and served to offset Canadian price weakness carried over from 2007. Customer pricing trends in Canada began to improve in 2008 due to strengthening industry fundamentals associated with higher natural gas pricing.

Even if the drop in drilling rig demand is for older style rigs, that is telling in that conventional gas is in full decline. If it was just a matter of drilling more wells to reach slightly less desirable prospects, demand for rigs would be rising. But it appears instead that the transition from viable prospects to none happens quite suddenly. Faster than rigs are built / retire.

People still claim global warming is a threat when the earth is now in a decade old cooling cycle. Many forget the passage in Genesis (8:21) when God told Noah after the flood, “Never again will I doom the earth because of man…”

Never again will *I* doom the earth because of man, but that's not to say the earth cannot be doomed directly by man. Does that mean that god will prevent the earth being doomed by a launching of every thermonuclear device in order to produce a completely scorched earth? That article is so loaded with fecal material I walked away with the odor imbued in my sinuses! The saddest part in my opinion, is that some people actually believe this nonsense!

Yeah, there are so many statements which are false that it makes one wonder how a person with an engineering degree could have acquired these. Well, it's just another example of the effectiveness of the anti-science efforts of the Fundamentalist, who live in a world defined by the myths of the Biblical world view. Lots of these folks are Young Earth Creationist and they simply can't accept the facts gathered by science, such as the measured age of the Earth at 4.55 Billion years (that's 4,550,000,000 years, not 6,000) or the concept of Evolution. These folks have been fed so much denialist propaganda that they think that Global Warming is a hoax, even as the Arctic sea-ice melts away and the glaciers in Greenland turn into rivers of melt water cascading thru the ice on the way to the ocean.

There was an interesting story about teaching Evolution in Florida which appeared in the NYT. By the time the Fundamentalist kids get to high school, they have already formed strong beliefs that run counter to the scientific point of view. And then there are the home schooled kids that NEVER get exposed to the sciences...

If you really want to see a great documentary on the Evolution-Creationism debate check this NOVA presentation out: Judgment Day: Intelligent Design on Trial. It is about two hours long but it is broken down into twelve short chapters so you can watch it one chapter at a time. The first chapter:

A TOWN DIVIDED
The rural community of Dover, Pennsylvania is torn apart in the latest battle over the teaching of evolution, and parents file a lawsuit against the town's school board in federal court.

Creationism is ridiculous, Darwin's theories do little to shed light on this one-the whole idea or premise that human intelligence is so powerful that we can answer all questions of existence such as the origin of all life is comical. The irony is that the same people who accept that we are the most intelligent primate species, yet just a primate after all, feel our intelligence and knowledge has no boundaries. Fanatics on both sides of this one.

Brian, you give qualities to Darwin and other evolutionist which they do not possess, then proceed to slay them with a pitchfork. It is called "The Strawman Argument". Darwin never proposed that human intelligence is so powerful that it can answer all questions. I know of absolutely no notable evolutionist who does either. Who, in God's name, would ever propose that we can answer all questions of existence such as the origin of life. Evolutionists, such as Dawkins, Gould, and others have stated over and over that the study of evolution does not propose to answer questions as to the origin of life, but only how life changed over time. But I suppose you have never read them otherwise you would have not made such a silly mistake.

The study of evolution is a study of history or how life evolved from simpler forms. Natural selection is the process by which life changed over time. As Dawkins has said, "Natural selection is a process, evolution is history."

At The Panda's Thumb, Nick Matzke has a post about abiogenesis (the origin of life from non-life) and evolution. He, PZ, and others argue that abiogenesis is part of evolutionary biology and that it is a cop-out to deflect challenges about it from anti-evolutionists

"The Panda's Thumb" is a creationist publication. Watch the NOVA link I posted above, the book is at the center of the controversy. And as the article points out, one would need to understand evolutionary theory to attempt to study the origins of life, however one would not need to understand the origins of life to understand evolution.

All that being said there are hardly any disciplines that are totally separate. And I repeat, evolution is not about the origin of life. That has been stated by virtually every evolutionists who has ever existed but creationists keep implying it is, just like the creationists at The Panda's Thumb.

"The Panda's Thumb" book is not a creationist publication. The full title is: "The Panda's Thumb: More Reflections in Natural History" and it was written by Stephen Jay Gould, a Harvard paleontologist and evolution supporter.

The Panda's Thumb web site is home to a blog dedicated to promoting evolution and scientific discussions of the creartionist/intelligent design vs. evolution controversy. PZ Myers and Nick Matzke both frequently contribute to, and comment on, The Pandas Thumb blog and are both strongly anti-creationist and anti-intelligent design.

You are likely thinking of the book "Of Pandas and People: The Central Question of Biological Origins" which was written as an anti-evolution, pro-intelligent design high school biology textbook and is frequently used by religious fundamentalist schools and home schoolers.

Even these of them ye may eat; the locust after his kind, and the bald locust after his kind, and the beetle after his kind, and the grasshopper after his kind. But all other flying creeping things, which have four feet, shall be an abomination unto you. Leviticus 11:22-23

Note to Bible: there are no flying creeping things with four feet, except maybe flying squirrels?

The Bible (and Koran) was the best we could do with what we had. The stories are not factual, but that was never the goal. Their purpose is to conserve wisdom and social fabric across generations with very low technology. Atheists who hate the counterfactualisms, and the bible-thumpers who love them, are just two sides of the same coin.

We can safely assume that our quantum mechanical model of the universe is an approximation of ground truth. A hypothetical super-advanced civilization that reads our physics textbooks may feel: "hmm this isn't really the truth. it's full of anecdotes and guidelines. but it's the best approximation we could have expected of them, given their circumstances."

You know, I'm going to go all Zen on you only because you provided such a good answer and it has given me the luxury to philosophize instead of rationalize. Thank you.

What does it matter if we know the origin of life? Will that materially change our present circumstance or near future. Life exists in the moment. I care not whether we are the successful chance result of evolved amoeba or the beings made from clay, and the other gender a spare rib. What defines our existence is now. Live it, love it, accept it and share.

And I'm not even a Buddhist :-) hee, hee, and I don't even know if that is part of the Zen mantra. Oh well.

I saw that documentary, it was pretty good. I had heard that the motivations for the school board members who were pushing this were religious rather than scientific but the documentary goes through the specific examples. It's pretty amazing, humanity at its ugliest in some parts (the reaction from the townspeople towards the parents that didn't want their child being taught religion in schools). From the documentary it was obvious that people who were doing this don't understand why what they did was wrong to this day.

I wonder about this focus on religion in politics and schools. Awhile ago the Pew foundation did one of their usual surveys about religion in the U.S. and found that the number of people remarking that they were unaffiliated went up relative to awhile ago. I can't find the precise article, but here's a graphic showing something similar from the NYT:

Of course, this unaffiliated category considers all kinds of people not just agnostics and atheists. But still, this decrease in people considering themselves protestant may be indicating that the "theocrats" are feeling threatened with good reason, they're losing believers.

* I use "theocrats" for lack of a better term -- I just mean people making their religion a political agenda.

*edit* The thought occurs to me that the decrease in protestantism could also be a reaction rather than a cause. The none category above starts to increase right around when Newt Gingrich and the modern republican party won control of the House. They have very obviously made enforcing strict religious beliefs on the population a centerpiece of their political agenda.

To answer if it is a cause or an effect, we would need to know why it's happening in the first place and that in turn would require, ultimately, to know what purpose religious belief serves in the human, how did it get there and what drives it. These I think are rooted in the psychology of the human animal and beyond our comprehension though. Or divinely inspired if you will. :)

The Pew forum report is here, and the NYT graph appears to have confused "unaffiliated" with "none". As the Pew report points out, most unaffiliated Americans are religious, and 27% occasionally attend services.

The survey showed that 1.3% of Americans were self-identified athiests.

We have a taboo against "polite" discussion of sex, money, religion, and politics, yet these are almost entirely what motivate people, and all involve some level of willful self-deception. It therefore shouldn't be a surprise that the public can't think.

We have a taboo against "polite" discussion of sex, money, religion, and politics

Not so much in New Orleans. Many conversations about the diaper preferences of Sen. Vitter, how much he paid for the pleasure and how the church leaders/supporters of his have applied a double standard.

For a good review of the influence and power of the Christian Protestant (fundamentalist) right in the United States I would recommend Michelle Goldberg's Kingdom Coming: The Rise of Christian Nationalism (NY: WW Norton & Co., 2007). Another interesting view on the uniqueness of the American religious experience is Harold Bloom's classic, Omens of Millennium (NY: Riverhead Books, 1996).

Please note, the majority of Christians are not fundamentalists.

Moreover, what is referred to as "fundamentalist" theology is not "conservative" at all (despite claims to the contrary it fails to answer the question, "what does it wish to conserve??") but is quite modern and radical. Its dispensation brand of Christianity has its roots in the theological teachings of the oddball and arguably heretical John Nelson Darby (1800-1882) and the anti-clerical and anti-credal Plymouth Brethren Movement of the 1820s.

The problem is, like most radicals and ideologues, fundamentalists live in a flattened universe of knowable proportions. Whereas most traditional Christians see God as ultimately "mystery", the fundamentalists have boxed in the unknowable by way of a rigid interpretation of scripture. BTW, this claimed "literalism" is quite selective and ignores other scripture passages that contradicts their point of view. In fact, many mainline and orthodox Christians see this as an apostasy of Christianity since it idolizes "the word" rather than follows the Word (who incidentally is a person and not a written manuscript).

What makes the fundamentalists such a powerful force in American life is their narrow focus: there are very few things that can or will distract them. What makes the fundamentalists such a dangerous force in American life is their narrow focus: they're right and on God's side and pity help anyone who opposes them.

Moreover, no extreme is too extreme: nuclear destruction and environmental degradation are all part of the great plan of God's good purpose.

To those of you who are challenging such ways of thinking, I wish you well and Godspeed. B/c if someone truly believes the world is only 6000 years, then it is the providence of the creator who put that black gold in the ground and likewise there should be an unlimited and endless supply.

I believe that "fundamentalism" started a long time before Darby (who seems also to be the "father" of Mormonism as well as the whole Christian-Zionist notion). I've been reading Philip Ball's The Devil's Doctor (biography of Paracelsus.) Although Paracelsus was no Darwin, he did offer a radical challenge to the existing orthodoxy, and throwing Martin Luther into the mix complicated things a lot. Luther had to become a "fundamentalist" and cozy up to German princes to avoid being burnt at the stake-- while the Catholics solidified their orthodoxy, strengthened the Papacy and created the modern world. The "radical" Paracelsus helped to define the divide.

I just got finished reading In the Name of the Rose by Eco. I looked around a bit about some of the events the characters discuss in the book and what amazed me about it was how long before Luther there was this fundamentalist divide. The book discusses events back until the 13th century, but I bet it goes all the way back to the origin of Christianity. I guess there was a lot of debate over whether Christ was poor or not (a big deal when you consider how rich some of the church members were). If they could be reconciled with the church and were good politically they were brought into the fold like the Franciscans, otherwise, they were burned as heretics. I'd say that Luther was pretty fundamenalist though, by holding that the word of god is only in the bible and not in the word of the church.

Yep... I would agree the roots of fundamentalism go further back than Darby. And yep, it was Martin Luther who gave us the phrase, sola scriptura, "scripture alone".

And what is happening in America does in some ways mirror -- to a lesser extent -- the religious divide from ages past: extreme elements in Latin Christianity (both Roman Catholic & Protestant) jostled fervently for power and influence in the religious wars of the 16th & 17th centuries.

Historians identify that much of the social and intellectual response to this extremism was what has since become known as the Enlightenment.

However, the salient strain of contemporary American fundamentalism is Dispensationalism. And that's Darby's work. Even where it is not, the "literalists" have adopted one of the least flattering tendencies of the enlightenment, i.e. to flatten the universe by always equating "truth" with "proof". Needless to say, from their point of view, the "proof" lies in the book.

As Einstein once said, "Science without religion is lame, religion without science is blind."

B/c if someone truly believes the world is only 6000 years, then it is the providence of the creator who put that black gold in the ground and likewise there should be an unlimited and endless supply.

Unless they believe that just as the resource runs dry, all the righteous people will be raptured away, leaving the unrighteous left behind to suffer the consequences. Then all the claims of an unending supply are seen as little more than a ploy to distract the unworthy.

As a Chemical Engineer, I love politics, and am an orthodox Catholic. I am a "Guest Columnist"('Asheville Citizen-Times'), a regular columnist(North Carolina Conservative), and a contributor to the book "Americans on Politics, Policy, and Pop Culture". Politics are usually covered with a skew from a Catholic perspective.

A university degree does not prove that anyone can think -- only that he/she has put in some time somewhere. Our president has a MBA from a prestigious institution, but there is little evidence of any business savvy. (Unless there was truly evil intent to collapse the economy-- which is a venture in to WT's Tin Foil Hat Land.)

I think that in general, skepticism and "scientific" thinking is a relic of the past. We are watching the birth of a New Age of Feudalism.

Those who believe in a literal interpretation of scripture, and a substantial number of Christians and Jews do not accept literal interpretation, must reconcile the statement from Noah with the end of the Book of Revelations which has God destroying this world and creating a new one. Both Noah and John the Revelator cannot be right under a strict literal interpretation.

With Noah, I believe the promise is to never again destroy the world with water. In Revelation, God doesn't use water. No prob.

However, got to agree, "literal interpretation" is a modernistic approach, and not particularly possible, given the way we don't know what the actual words meant 3000 - 4000 years ago. Maybe "world" meant "everything I know about". Who knows? Lots of words have changed their meanings, for example, "silly", "doubt", and "elektron".

The most effective rebuttals to creationism and literalism usually lies in textual criticism, rather than attempting to argue the scientific case.
For one of many instances, there are clearly two stories of the creation in the bible, and they are quite irreconcilable.

In the words of Joseph Campbell 'To treat poetry as though it were a factual history is to prove oneself a dolt'
Apologies that that is not an exact quote, but the substance is correct.

As Winter heating season approaches, it's interesting that there is already colder air filtering down from Canada. Temperatures this morning were in the 40's in Minnesota and there may have been some frost.

Given that this year's wet Spring weather caused delays in planting, an early frost in areas further to the south could cause some serious crop losses. It would be easy to say that colder weather as described mean there's no problem with Global Warming, but, at the same time, there's quite a bit of warmth still over the Western U.S. I think that we will see increases in temperature extremes as one result of Global Warming, not just a slight increase in temperature spread smoothly across the world. As such, an occasional winter with colder conditions is to be expected, especially as variation in ocean circulation occurs as well.

People worried about the high cost of keeping warm this winter will draw little comfort from the Farmers' Almanac, which predicts below-average temperatures for most of the U.S.

"Numb's the word," says the 192-year-old publication, which claims an accuracy rate of 80 to 85 percent for its forecasts that are prepared two years in advance.

The almanac's 2009 edition, which goes on sale Tuesday, says at least two-thirds of the country can expect colder-than-average temperatures this winter, with only the Far West and Southeast in line for near-normal readings.

"This is going to be catastrophic for millions of people," said almanac editor Peter Geiger.

The almanac predicts above-normal snowfall for the Great Lakes and Midwest, especially during January and February, and above-normal precipitation for the Southwest in December and for the Southeast in January and February. The Northeast and Mid-Atlantic regions will likely have an unusually wet or snowy February, the almanac said.

I don't put much faith in any long term weather forcast, but I would put more faith in the NWS forcast, which would be great news:

The almanac is at odds with the National Weather Service, whose trends-based outlook calls for warmer than normal weather this winter over much of the country, including Alaska, said Ed O'Lenic, chief of the operations branch at NOAA's Climate Prediction Center.

IMO just stick to 'Global Climate Change' - forget the politician's 'Global Warming' as people in denial and with an inadequate understanding of how the world works can always easily find counter examples.

It seems ridiculous to me for people to think that we will only see warmer weather with GW. I've been saying for years that Global Warming means more ENERGY in the atmosphere (*overall* heat/energy content) which, in a dynamic system would mean stronger / more severe VARIANCE. More of everything. Wet, dry, heat, cold...

Sure, blame it on the Canadians. Watch U.S. weather forecasts and it seems like the world ends at the 49th parallel, except when an arctic cold front is moving down from the north. Then, all of a sudden Canada exists and it happens to be bringing miserable cold like a demon front line on hockey skates. Geez!

I'm being mildly sarcastic - but truthful about the weather forecast part. Honestly, we haven't mastered weather control and inflict punishment to the south on occasion because the Rangers beat the Canadiens. I am seeing some rather cool weather in central BC and it sucks. Yesterday morning felt like early October, and it seems summer lasted about 3-1/2 weeks.

Its making me rethink which locations will make it through PO better than others when local food production is a major consideration.

On the article about investing in Gold or(AU)A person
who possessed say $20.00 worth of gold in 1850 and
went to town in their horse drawn wagon,that person could purchase a wagon full of products such as,flour
sugar,a gun,some ammo,shovel,hoe,pick axe,hammer,nails
and so on.
That same amount of gold owned today by an individual
would enable them to go to the mall in their SUV pushed by a 3 hundred horse power internal combustion
engine and they could purchase with todays value of the exact amount of gold,an SUV full of,flour
sugar,a gun,some ammo,shovel,hoe,pick axe,hammer,nails
and so on.
Gold has remained an inflation protection device and
really only displays the devaluation of the fiat
currency (dollars) that we use as legal tender.Should
a person in the effort to (get ahead) want to use gold
and increase wealth,they would need to (time) the market and buy on dips and sell on peaks (not recomended)Gold prices were relatively stagnant for
many years and no one seemed to want it,yet when it
rises,people tend to chase momentum,Then get burned when they (bought at the top) and when it drops slightly, they bail out lower then when they bought in
I suspect gold wasnt viewed as a viable investment
during the late 1990's because it didnt have a DOT and
a COM in its trade symbol. But thats just MHO.

Gold might be a great inflation hedge over 158 years, but people only live a little while. As a personal hedge against inflation it seems to be largely useless. As a speculative investment, it seems to be as good as roulette or dice. Gold stocks are as good as your broker and his/her company. Physical gold is fine if you have Fort Knox and the U.S. military to protect it.

One strong consideration for owing physical gold is privacy. One could use it to readily shield wealth...from creditors, from divorcees, from anyone, really, and you pay no gains on its increased valuation (assuming you had any). This is a real issue, and something I wouldn't consider trivial during any resource scarcity.

I dont know anything about investing...but. I cant see
how my broker (Be it Fidelity or E-Trade) would have
any bearing on me purchasing a "gold stock" like say
Barrick Gold symbol (ABX).
The performance of the gold stock will fluctuate due
to all manner of market nuances...none of which have
anything to do with a persons broker.
Of course not being a private portfolio asset manager
myself....Iam probably just blowing smoke up my own
skirt here...cough cough.

I don't put large sums of money under my mattress. If you put those $20 in a bank at 3-4% interest rate for 158 years you would have between $1 000 and $5 000.

Also, the government under Roosevelt would have confiscated that gold from you at gun point in 1933(it really does come to that if you refuse to fork it over vigorously enough). It would have reimbursed you with dollars before adjusting the price of gold upwards.

Talk about a common sense, down-to-earth guy with some of the most piercing insights, combined with awesome powers of communication: This interview is a must see. An example:

Moyers: You say, “U.S. troops in battle dress and body armor, whom Americans profess to admire and support, pay the price for the nation’s refusal to confront our domestic dysfuncion.” What are we not confronting?

Bacevich: The most obvious, the blindingly obvious question, is energy. It’s oil. I think historians a hundred years from now will puzzle over how it could be that the United States of America, the most powerful nation in the world, as far back as the early 1970s, came to recognize that the dependence on foreign oil was a problem, posed a threat, compromised our freedom of action. How every president from Richard Nixon down to the present one, President Bush, declared: “We’re going to fix this problem.” None of them did. And the reason we are in Iraq today is because the Persian Gulf is at the center of the world’s oil reserves. I don’t mean that we invaded Iraq on behalf of Big Oil. But the Persian Gulf Region would have zero strategic significane were it not for the fact that’s where the oil is.

Maybe those future historians will know that alternatives are not a substitute for the black crack. It is possible to transition to them, but Americans can't expect the same standard of living after the transition. No politician would dare suggesting a reduction in the standard of living. So they delay and wait for reality to prod the public to change their thinking.

So they delay and wait for reality to prod the public to change their thinking.

This was told to me in almost exactly those words by one of our county supervisors during the Q&A period of my peak oil presentation to the Board.

It's not true of course that they must wait for the public sentiment to change. It's a lot of work to educate the public and there is very definitely risk, so it seems to me to come down to courage and commitment.

ANDREW BACEVICH: Politically, and strategically, the outcome of that war [the Gulf War] was far more ambiguous than people appreciated at the time. But nonetheless, the war itself was advertised as this great success, demonstrating that a new American way of war had been developed, and that this new American way of war held the promise of enabling the United States to exercise military dominion on a global basis in ways that the world had never seen.

The people in the Pentagon had developed a phrase to describe this. They called it, "full spectrum dominance." Meaning, that the United States was going to exercise dominance, not just capability, dominance across the full spectrum of warfare. And this became the center of the way that the military advertised its capabilities in the 1990s. That was fraud. That was fraudulent.

To claim that the United States military could demonstrate that kind of dominance flew in the face of all of history and in many respects, set us up for how the Bush Administration was going to respond to 9/11. Because if you believed that United States military was utterly unstoppable, then it became kind of plausible to imagine that the appropriate response to 9/11 was to embark upon this global war to transform the greater Middle East. Had the generals been more cognoscente of the history of war, and of the nature of war, then they might have been in a better position to argue to Mr. Rumsfeld, then the Secretary of Defense, or to the President himself, "Be careful." "Don't plunge ahead." Recognize that force has utility, but that utility is actually quite limited. Recognize that when we go to war, almost inevitably, there are going to be unanticipated consequences. And they're not going to be happy ones.

Above all, recognize that, when you go to war, it's unlikely there's a neat tidy solution. It's far more likely that the bill that the nation is going to pay in lives and in dollars is going to be a monumental one. My problem with the generals is that, with certain exceptions, one could name as General Shinseki, with certain exceptions-

BILL MOYERS: Who said, "We are going to need half a million men if we go into Iraq." And-

ANDREW BACEVICH: Right.

BILL MOYERS: -he was shown the door for telling the truth.

ANDREW BACEVICH: By and large, the generals did not speak truth to power.

Ironies abound in history.

Talk to older people in Newfoundland about the confederation debates of the late 1940s. Newfoundland was the last province to join Canada in 1949 after a referendum on the question. Three options were on the ballot: direct commission government from London for five years, responsible government under Dominion status for Newfoundland, or federal union with Canada. Newfoundlanders voted for federation with Canada.

One option that was bantered about but not included on the ballot was "joining the United States". It's interesting that the prospect of forging a permanent link with the Great Republic to the south was to Newfoundlanders a serious proposition for reasons that may seem odd today.

Up until the Second World War, it was the Canadians who seemed to be eager beavers to "fight the good fight" and embrace foreign entanglements. A country of eight million mustered an armed forces of a half million during World War I and suffered heavy casualties including 65,000 dead; only to repeat the performance by sending a million into combat out of 11 million twenty-one years later (1939) to lose another 45,000.

In 1948-1949, it was the United States that was viewed by outsiders as pacifist -- at least not overtly war happy. Yes, the US had become involved in WWII, but most reluctantly and despite its longing for "splendid isolation". American imperial ambitions... although rooted in the 19th century (Munroe Doctrine, Spanish American War, Hawaiian annexation, etc.)... seemed positively tame in comparison to the Great White North above.

Once the consumer American way of life became "non-negotiable" everything else followed suit.

Really threw a monkey wrench into the expression, "the more things change, the more they stay the same."

Zadok, I would simply up-vote you, but there is a glitch with the code on the web page today. Instead, I'll pass on my support and sentiments.

What gets lost in the noise, or amplification of history are some of the small facts. These small facts are usually monumental in affect. Prior to Dec. 7, 1941 Canada and Australia patrolled the Pacific to counter the Japanese. Granted, they didn't have much of a counter force, so it was more of a recon role. Then I heard from a Canadian Naval War Veteran a story I will never forget after mentioning I had just read the book "A Man Called Intrepid". To quote (and I want my American neighbors to pay very special attention to this):

"I know Pearl Harbor was a setup. We were in port on Dec. 7th and were called to quarters real early. About 6:30 I think. We shipped out in an hour. The Canadian Navy never ships out on a Sunday."

So where has this been covered in the history books? Canadian Navy in Pearl Harbor on Dec. 7th? Conveniently forgotten to embellish the larger story, or furtively sequestered to hide the machinations?

Why would Bacevich believe that there will be historians a hundred years from now? When the world collapses from a lack of fossil fuels, who would be interested in employing a historian on their vegetable patch? [If the world collapses with 6 billion people, I think that I can assure you that it will not look like the Greek and Roman days, etc., when there were far far fewer people.]

His perspective is from a point of view of foreign policy and history. He may not have considered the larger implications of, say, peak oil.

But he has nailed the American problem that prevents us from realizing the truth of our situation. We are spoiled and like any spoiled child will throw a tantrum rather than accept reality. I say American problem but that is only a temporary condition.

As other nations adopt consumeristic behavior (and we can see it unfolding in places like Japan and Australia) we can expect the same kind of spoiling in other cultures - we are all humans after all; cultural difference may account for different ways it will play out, but the tendency is biological.

And that brings me to the real core of human problems. As a species we are not sufficiently wise to deal with the world we have created through our own cleverness (intelligence + creativity). Wisdom comes from a more recently evolved brain capacity for judgment, true altruism (moral sentiment), systemic and strategic thinking. These capacities appear to be mediated by the polar most reach of the prefrontal cortex. I call the brain capacity sapience. That, coupled with a lifetime of acquiring rich tacit knowledge (mediated by the systemic and strategic components), is what produces whatever level of wisdom humans can muster. Unfortunately, it does'n seem to be enough.

The really big question is, if we are smart enough to figure out that we are not wise enough, what will we do about it? Are we just wise enough to realize this?

There will be historians, he may have just got the planet of origin incorrect ;-)

I like to use the metaphor of the "alien archaeologists" to put some of our current patterns in perspective. A few thousand years from now they will be examining the artifacts of our civilization and remarking on the great non-cognitive steel and rubber automotive species supported by the slave organic bi-pedal underclass.

I just finished watching it. It was GREAT! This guy tells it like it is, like I have never heard anyone tell it. Everyone should watch this interview if they really wish to know what is happening to these United States. It is a tragedy.

I'm anxious now to watch his other interview on the transformation of the Middle East as well as read his speech on Reinhold Niebuhr.

I've never read Niebuhr, but I find it interesting that he was also one of the theologians that most influenced Martin Luther King:

The basic change in my thinking came when I began to question some of the theories that had been associated with so-called liberal theology. Of course there is one phase of liberalism that I hope to cherish always: its devotion to the search for truth, its insistence on an open and analytical mind, its refusal to abandon the best light of reason. Liberalism's contribution to the philological-historical criticism of biblical literature has been of immeasurable value and should be defended with religious and scientific passion.

It was mainly the liberal doctrine of man that I began to question. The more I observed the tragedies of history and man's shameful inclination to choose the low road, the more I came to see the depths and strength of sin. My reading of the works of Reinhold Niebuhr made me aware of the complexity of human motives and the reality of sin on every level of man's existence. Moreover, I came to recognize the compexity of man's social involvement and the glaring reality of collective evil. I came to feel that liberalism had been all too sentimental concerning human nature and that it leaned toward false idealism.

I also came to see that liberalism's superficial optimism concerning human nature caused it to overlook the fact that reason is darkened by sin. The more I though about human nature the more I saw how our tragic inclination for sin causes us to use our minds to rationalize our actions. Liberalism failed to see that reason by itself is little more than an intrument to justify man's defensive ways of thinking. Reason, devoid of purifying power of faith, can never free itself from distrortions and rationalizations.

--Martin Luther King, Pilgrimage to Nonviolence

and

History is the long and tragic story of the fact that privileged groups seldom give up their privileges voluntarily. Individuals may see the moral light and voluntrily give up thier unjust posture, but as Reinhold Niebuhr has reminded us, groups are more immoral than individuals.

Indeed. The saddest thing is that this does not need any special insight or study to ascertain. Everyone knows the rich are out for themselves. Hell, your neighbor, brother and best friend are. Trickle down? how could it ever work? Lowering taxes of the rich? It has only increased the disparity. But this was obvious even before it happened.

As for insight: If I, and I am sure many here, had figured out that the wealthy don't give up what they have as a group, why in the world can't anyone else?

I was gratified also to see him describe virtually word-for-word what I have advocated for dealing with the "War on Terror", a.k.a. the War on the Constitution, Geneva Convention, etc.: Exactly what Europe has done for decades. Elite special forces, interpol, intelligence agencies working in concert and making surgical strikes/arrests against these organizations.

This is obvious common sense. If we accept my description in the previous sentence, then we must assume The Dick also knows this. If we accept that, we must ask, then why the War on Terror and the invasion of Iraq?

These are rhetorical questions, obviously.

EDIT: He adds "we" as the deepest root of the problem. Again, absolutely. All that is necessary to reign in the presidency is for Americans to stand up, walk outside, join hands and sit the hell down. Simply stop participating. Then vote them all out and find nothing but Mr. Smiths all over the country to replace them with. So simple, yet so impossible.

When I watch Bill Moyers and some of his guests, it gives me hope the greater American society may yet survive. However, would you elect Bill because you would want to have a beer with him at a BBQ? Crap! There goes that bit of optimism down the drain...

i listened to the full hour.
i thought he did speak truth.
i was very disappointed @ the end though when he posited that we [the US] would debate the iraq war & he hoped see it was a huge mistake.

with peak oil i am concerned we will see the iraq war as creating us a 'right' to the needed oil. 2 conversations i have had with at least moderates [politically], when they considered my peak oil concerns immediately jumped to our getting iraq's oil as basically our's given war costs. & these were 2 of the very few that i fairly quickly could get very far into the peak oil issues this past year.

Concerning the natural gas article and arguments on
supply increases.I have no doubt that more wells have
been drilled all over the lower 48.Iam not sure that
it has resulted in a surplus though.The usage of NG is
quite possibly keeping pace with added supply or even
outstripping it.I have seen many new wells all over
north east Ohio and the media reports this, as it is
impossible for anyone with eyes to not see it for themselves.I even called and inquired about the possibilty of having my own well drilled.The cost I was given was $250,000.00 min and was informed I would
receive 3000 MCF for free from the well and 15% royalties on the gas produced.Of course this was just
the pre negotiation stage and Iam certain I could get
more favorable terms were I to drive a harder bargin.
Virtually all municipalities here have gas wells on
their public owned lands and use them to heat the schools or muni office building,yet they say the revenues are paltry and dont contribute much.Of course
I myself trust everything and would never ask to see
the books or try to perform a audit. Hey! their my
goverment and I know they want to help me.

Have you noticed that your posts are very much different in format from the rests of the posts on this site? Do you realize they are very difficult to read? If so, why do you persist in this? Or, are they supposed to be prose poems? My guess is that some of your negative ratings may be due to the format rather than the content. Further, my guess is that many here do not bother to read your posts because of the format. Anyway, it's your call, obviously.

P.S. I am not trying to be insulting. I am just making an observation that might be helpful.

Possibly Neph thinks he has to hit a 'hard return' at the end of each line, instead of just continuing to type, and letting the words 'soft wrap' automatically. Punctuation is also lacking. Too bad, because it means I usually skip over Neph's posts.

My guess is that he's doing that because for some reason he cannot see much of what he is typing. His screen resolution/text size may be set so that the text box is either too large or too small for him to see easily.

My guess is that he's likely pressing the Enter key to create a carriage return as opposed to using the auto wrap feature. However, that is just a guess. The other item being the lack of spaces between the period at the end of a sentence and the beginning of a new one. I'm not a grammar and spelling nitpick, as I certainly have my own failings, but certain things like that just stick out like sore thumbs.

I always just figured that this was done in homage to the old school mailing list etiquette of 74 characters a line. Who knows, maybe he is typing this from a Unix text terminal that would make this kind of format convenient.

On my drive to work from Columbus to Circleville, OH, I have noticed a new gas production field was recently constructed. It isn't huge (~100x100ft), but it was interesting to see it spring up recently.

There was (and very likely still is) an organization called the American Iron and Steel Institute, which was (is) to the iron and steel industry what the American Petroleum Institute is to the oil industry - a combination trade organization, lobbying group, and information clearinghouse.

I have not had any involvement with them since the early 1980s, so I don't know if they still operate under the same name, or have become a different organization, or have become extinct. In any event, it might be worth checking into.

There is no 'spot market' per se for iron ore. Roughly 80% of the world's iron ore sales are controlled by three companies -- CVRD (Brazil), Rio Tinto (UK) and BHP Billiton (UK). These three companies sell directly to their steelmaking customers and do not discuss prices publicly, for obvious reasons. Iron ore/fines/pellets are not traded on any public exchange, so there is no public pricing available. Note that steel scrap is publicly traded; I don't know your reason for wanting iron ore prices, but you may be able to use scrap prices as a substitute for iron ore.

If you really want to determine iron ore prices, your best bet would probably be to look at the financials for one of these companies. Better yet, check out the quarterlies for Cleveland-Cliffs, the largest US ore producer; they are more of a 'pure-play' iron ore producer than any of the above companies.

The American Iron and Steel Institute (www.steel.org) and its sister organization, the International Iron and Steel Institute (www.worldsteel.org) are both alive and well. I doubt either has any information on iron ore prices, but it is worth a look. That said, both of these organizations are good for general info about the steel industry, production, statistics, etc.

Ya, my wife had Fay wander close to Jacksonville with minor amounts of flooding, and excessive amounts of media coverage. Really, you don't need 24/7 coverage for a storm. It's coming, make preparations, get over it.

But, in the rear view mirror of Katrina - which my wife and I drove through in Ft. Lauderdale and Miami - I still cannot believe the lack of urgency for that storm. Heck, I'm from the GWN (Great White North) and recognized the major hurricane danger as soon as it crossed Florida. When Katrina put on the right turn signal and made for Rampart St., I saw this 3+ days out.

That said, is it unreasonable to think GOM operations are much better prepared now?

Before Katrina reformed after crossing Florida, New Orleans was in single digits probability (4% ?) for Katrina as of 9 PM Friday with the Florida panhandle the target. At 10 PM Friday the odds increased to range of 50%. Roads into New Orleans were closed for contraflow between 1 and 3 PM Saturday. The last road out of New Orleans was closed between 4 & 5 PM Sunday (first closed @ 3 PM I think). The plans that started at 72 hours before were landfall jumbled (and 10 PM Friday is hardly the ideal start time).

So far, all the cities' evacuation plans merely create sitting targets on stalled Interstates. The "evacuation by automobile" method only works if people are willing to leave no less than three days prior. This happened in Jacksonville, FL when Floyd was coming. Most of the people I knew couldn't get off I-10 west of town. Those that did get away early were lucky to find accommodations in another town.

I don't have the answer for effective evacuations, and I don't think we will have one for some time. I suppose the heart of the matter is the large expense to move 100's of thousands of people, which may appear wasted if the storm misses. Although this expense is born by the individual, it looks much larger if the cost is paid by a central entity such as the government.

1) HUGE traffic jams leaving town
2) Gasoline shortages (not just price gouging, but stations ran out quickly and trucks couldn't get to them to resupply, see #1)
3) no shelter for evacuees - spend 14 hours in your car, then sleep in it on the side of the road or in a parking lot because there are no hotels or shelters where you ran out of gas (see #1 and #2)
4) cellular service widely disrupted as people tried to figure out what was going on

Many people were stuck in traffic for hours, decided to go back home, and then were fine because the storm basically missed Houston. I suspect the next evacuation order won't be listened to very well.

1) how realistic are the rumors that a Nat gas boom is about to start in my neck of the woods (SE Ohio).

2) In my area the marcellus shale is said to be quite shallow, sometimes as shallow as 50 feet. The local small nat gas companies do hydrofracturing but are not capable to horizontal drilling. Like I said, the shale is shallow and it's hilly here (foothills of the Appalachia mountains). In fact, there are cliffs around here where you can see the shale in the cliff wall. I am wondering if a small nat gas company with standard drilling equipment could set up their drill in a valley and drill horizontally into a hill in order to get a horizontal well without having to make a 90 degree turn. By drilling straight horizontally, the pipe could be 50 to 100' deep after drilling only a few hundred feet horizontally. Or will the major developers have to move in to get at this stuff.

PG -- there are two shale gas plays running across SE Ohio: the Marceluus in the far east and the Devonian (New Albany) to the west. Just a guess but drilling horizontally into a hill side might not work to good. Burial beneath the ground is need for increased reservoir pressure which is needed to get the gas to flow out. There may be producible gas in the hill side but not at pressures considered commercial. But, believe it of not, you might make enough gas from such a well to heat your house during the winter. But it's not something you would want to try yourself. NG is odorless and invisible. The stuff from the gas company is odorized so you can smell a leak.

Just be patient. If your land has NG value someone will come knocking. And if they do find you a cheap lawyer and cut the best deal you can.

I don't have any significant land holdings. I know several small nat gas companies around here and was wondering if there might be a good investment oppurtinity.

"Just a guess but drilling horizontally into a hill side might not work to good. Burial beneath the ground is need for increased reservoir pressure which is needed to get the gas to flow out."

Yes but if you drill from the side of a hill horizontally a few hundred feet or from the top of the hill down 100 feet then make a 90 degree turn, you ultimately end up with a pipe running in the exact same position and angle.
But as you say, perhaps if the shale is so shallow there may not be enough pressure no matter how you reach it.

I was approached (I live in South Central Illinois just south of Mattoon) by a an oil company a couple of years ago. They seismic tested my land and the areas to the north and west about a year and a half a ago. Never heard anything as to the results, but last week they were re-testing the areas just to the north of me.

Isn't that somewhat redundant? You see, I like Oglethorpe and Shakespeare. Bill, you know about with "kill all the lawyers" etc. Ogly was the first governor of Georgia. One of his first actions was to ban lawyers from the colony as they were "mischievous and meddlesome" (IIRC)

Every boom evolves. This time around the minerals owners are more savvy thanks to news stories and the Internet. Many know to not get to anxious and take the first check some oil company rep waves under their nose. But this also brings in lawyers who are willing to rep the mineral owner for a ridiculous price...sometimes actually demand a piece of the royalty. And more than once I've seen such lawyers kill the prospect of having a well drilled by being to greedy. I've consoled many mineral owners who didn't have a clue how the process worked and paid the price for it. But, typically, by the time we chatted it was too late for them.

As you say...first thing...kill the lawyers. Many folks hate lawyers...until they decide to sue someone.

Well, it's official. Hell is about to freeze over. Good thing that I didn't offer a bet last week about my chances of being on CNBC. I am tentatively scheduled to call in by phone to the "Fast Money" Show on CNBC, which I believe is from 5:00 to 6:00 P.M. Eastern. The schedule is always subject to change, but the producer sounded very intrigued by the ELM. The topic is what to expect for the fall. I expect declining net oil exports.

Supposed to be today, but they probably don't finalize the schedule until the last moment. We shall see what happens.

First instincts are probably the best. The producer just called and said that they won't be doing the net export story tonight. I sent them the link to the Sandia Labs presentation. They may have watched it.

The mastadon and sabertooth tiger have passed away. The onset of global warming began long before the industrial age. An ice age would be more devastating than a 4 degree rise in temperature, especially in Iceland. Not expect many votes if you try to outlaw the use of gasoline, diesel, jet fuel, natural gas, and coal. Am sure nuclear cooling towers must contribute some warmth as well as does geothermal. A gradual cooling of the earth's partially molten interior might accompany the expected long term morphing of the sun into a red giant that might boil away the oceans. There was also threat of a hypernova forming in the Milky Way to produce a high-radiation event to snuff out earthly life as we know it. These hyper-nova events were as random as to be unpredictable.

I had previously heard about the hypothesis that an impact was a trigger for the YD, but had not seen the paper. The supplemental information is especially interesting. There is still the evidence that the YD period is related to a shutdown of the THC, so the bolide may have just triggered the sudden flooding of the North Atlantic which then stopped the THC. I would think that the effects of am impact would not have persisted for the period of the YD, which lasted more than 1,000 years. Thanks.

The North American Megafauna may not have been killed by the impact, but by the human population which found that other sources of food weren't available as plants were killed directly or burned. That layer of carbon associated with the remnants of the bolide represents a large area of fires. Who knows?

Geoengineering to combat global cooling (if it actually threatened), is actually an easy problem to solve. Just manufacture and release powerful greenhouse gases. Methane is 20some times as effective as CO2, but some of the freons are more like ten thousand times as effective. It is the asymmetry of the system -easy to overheat the planet, but hard to cool it down, that I find frightening.

Supernovas, and hypernovas are not really unpredictable, although our understanding of late stage stellar evolution, and diagnostics as to the state of stellar cores isn't yet up to the task. In any case, the former require a star of at least eight solar masses initially, while the later at least 20 (and probably more like 50). The nearest hypernova candidate is something like 8500 ly away, i.e. it wouldn't fry the planet, although a well aimed gammaray burst could messup the ozone layer. But these events are thought to be pretty rare, perhaps contributing to extinction events every half billion years or so. Not really something to lose sleep over. Although I suspect some goos SciFi could be written around such events.

As I learned from my "6 Second Sound Bite of Fame". The media are capricious and not well informed. Of the 5 minutes on the national news story, what do they extract but the 6 seconds of quote for the only thing I reluctantly said. Instincts be damned.

I sent them a bunch of links, with special emphasis on Venezuela & Mexico as examples of ongoing net export declines. So, it will be interesting to see if they pursue the story.

Copy of my email (after I didn't make the cut):

If you do want to pursue the Net Export story, a good way to illustrate
it is with Mexico and Venezuela. Check out their May, 2007 versus May,
2008 petroleum exports to the US at the following link (click on
history, monthly barrels per day numbers):

I addressed Mexico & Venezuela in the following article, written in
June, 2008. In May, 2007, they accounted for more than one-fourth of
US imports. Their oil shipments to the US are dropping at an annual
rate of close to 30% per year.

There is a data table in the following article showing the year over
year change for all net oil exporters, and the total, which shows an
accelerating net export decline rate worldwide (EIA data).

As I mentioned in our conversation, average monthly oil prices
increased at a rate of about 6% per month from May, 2007 to June, 2008
(to a recent peak of $134). Within this time period, there were two
monthly declines--August and December of 2007. In other words, we are
presently seeing a price decline at the same time that we saw a price
decline last year.

My premise is that the runup in oil prices in recent months is
primarily attributable to importers bidding for declining net oil
exports, and our (Brown & Khebab) work--and recent case histories
such as Mexico--show that net export decline rates tend to
accelerate with time.

Actually, that is the first thing that occurred to me--that someone saw my post last week (it was more likely that Yergin would renounce his undulating plateau model than that I would be on CNBC)--but I think that someone just saw one of the interviews from last week. In any case, as noted above, I didn't make the final cut (if I were producing an advertising supported channel, I'm not sure that I have myself on).

I actually don’t agree with the question of transfer of wealth, the fact that you are purchasing something does not mean you are transferring wealth, the way T. Pickens put it sounds as if the US is sending dollars in return for nothing, which is not true, as a matter of fact the issue can be argued in reverse (but this is not my point in this post), as long as purchasing foreign energy help power economic growth (create jobs, create business activity..etc) there is no wealth transfer, but wealth creation, the amount of created wealth may get smaller as oil prices move higher, but as long as the US economy continue to grow, I wouldn’t consider importing oil as wealth transfer.

The San Diego newspaper that published the item is about as centerist as The National Review and is trying very hard to get readers indoctrinated to the idea that high fuel prices are some form of taxation without representation, and that those monies are going to unsavory places. Note that at the top of the item we are given the following:

“A $10 increase in the price of a barrel of oil is the equivalent of a $42 billion tax on the economy,” said Peter Morici, an economist at the University of Maryland. “Many of the richest oil-producing countries don't spend that money, but keep it instead. That means it doesn't come back to us to purchase our goods and services.”

Morici said that if the oil money that was sent abroad remained in the United States, it could generate hundreds of thousands of jobs and bolster the gross domestic product – perhaps by enough to keep the economy from running into recession.

Then the item's writer slowly provides counterevidence that the above just isn't true and the last two paragraphs:

Joseph Quinlan, chief market strategist for Bank of America, said the reinvestment of petrodollars – including the investments in U.S. securities – provides a needed influx of money into the U.S. economy.

“The debt-stretched United States needs to attract more than $2 billion a day to cover its savings gap,” Quinlan said. “Against this backdrop, every dollar counts.”

But how many people read the full text of any article? This same pattern of writing, burying the real truth deep and towards the end of an article, has been practiced for quite some time now. I can think of many different ways to present this same information in a manner that negates the weight given the "hidden tax" idea.

Further evidence that an agenda is being pushed is present in the graph. Mideast and North Africa are grouped together to provide the impression that we get most of our imported hydrocarbons from the Islamic region. Why not then combine our North American sources (which would include the Carribean) into one--afterall, it's one region--but then it would be at the top with 660.7 and not provide the picture desired. (Also note how Asia is separated from the FSU sources, of which the most important for US imports are in Asia.)

It's not nearly as subtle where I live...they just ignore the whole idea of peak oil. In the past three weeks, I've read articles in the local fishwrap that assert that ethanol has saved .40-.60/gallon in gas prices, that more drilling will solve all our problems, that Texas has lots of energy because of the Texas Railroad Commission's wonderful management, and that suburbia will not fail because "we will fight for it."

The premise caught my eye - systems engineering applied to the energy crises. Good start. I was sorry to see it turn into a promotion for offshore drilling without a real 'systems' argument to back it up. But oh well.

In fact systems thinking is the only way we are going to be able to solve some problems. I'm not just talking about energy or global warming. I'm talking about the whole of human existence. For starters we really can't start to solve problems when we don't fully understand what the real problems are. For example, belief that we need to simply re-tool our energy systems, going from fossil fuels to renewables, so that we can go on with otherwise business as usual is most likely a misstatement of the problem. There is every reason to believe that we will have to seriously change our concepts of economics and population before any form of alternative energy flow is feasible. Only a thorough systems analysis will allow us to characterize the real nature of societal problems. And that needs to be done before we cast our lots with solutions.

The scale of these problems, energy, climate, water, population, etc. is mind boggling. Old-style systems engineering, per se, will not suffice. We need to have a full on systems science that can cut to the center by use of general principles. The basis is established and there are a number of researchers/academics ready to work on a general framework. Will it be in time? Good question.

You are right: nobody's defined what the problem is! Okay, we do have an "energy problem" ... but what does that mean? A future shortage?.. high prices?.. lack of knowing what we use?.. not knowing what we are going to use? ETC.

Do we want to change the way we use energy?.. or do we want to change the energy we use?

With Apollo it was simple:
A. Moon there,
B. we here,
C. we want:
1) to go from hear to
2) there to
3) here and
4) still be okay.

I got something called "karma error" when I tried to rate your post up, but you're dead on, in my opinion. This latest oil spike offers convincing evidence that planning for the future in the US is simply not going to occur. We will be dragged into peak oil kicking and screaming.

There are not enough candidates like Debbie Cook (D-CA) featured in the opening article of this thread to provide any evidence to the contrary. The energy policies of all candidates in my district in Arizona are pathetic demonstrating that none of them understand how to deal with peak oil. The U.S. is more likely to drive headlong over the falling edge of peak oil oblivious to the crash that is waiting at the bottom.

George, the problem is not that we couldn't come up with a good enough to start systems analysis. The problem is that it can easily be dismissed as just a theory. Our politics panders to the lowest common denominator cognitively, so the only way to get an intelligent program through is under the radar. But changing the energy/economic system can never sneak under the radar.

Looks like the model average is around 5.0sqkm and the trend looks to set the minima around 5.6Km. This might be good news as the sea ice might get a change to recover temporarily. Obviously multi-year sea ice will remain dangerously (not for oil and gas co's!) low.

The current measurement of northern hemisphere sea ice is about 3.5 million sqkm, well below the 5.0 million sqkm model average and the 5.6 million sqkm trend projected by the 22 researchers and models used for that July report.

Current measurements put the ice about half a million sqkm above last year at this time, and a little less than 2 million sqkm less than the 1979 - 2000 mean. Measurements from last few days suggest the sea ice coverage is probably at or very near to minima.

I have been following these two web sites on a daily basis for more than a year now and have come to the conclusion that cryosphere (UI) uses a higher percentage of ice as a base. National snow and ice data center uses 15% as a base.

I think you may be right, but there are references in research documents on other areas of the Cryosphere site to the 15% threshold. In my notes from a research symposium a few years back where the Crysophere folks spoke I have a reference (which nows seems rather cryptic) to the 15% figure being used for their site.

nsidc measures the total sea surface area with at least 15% ice cover over any unit area.

The other site measures the total surface area of sea ice, where the cover is at least 15%.

So, if a square Km of sea had 25% ice cover, that would add 1.0 sq km to the nsidc figure, but only 0.25 sq km to the other figure.

nsidc uses the larger figure, because the satellite data can underestimate sea ice cover in the melting season, ice with surface melt water is sometimes mis-interpreted as open ocean. This makes the sea ice figure less reliable and the data noisy.

People still claim global warming is a threat when the earth is now in a decade old cooling cycle. Many forget the passage in Genesis (8:21) when God told Noah after the flood, “Never again will I doom the earth because of man…”"

I couldn't pass this one up. A more literal translation of Genesis 8:21 is that God promised never again to curse the ground because of man. But anthropogenic global warming is not about what God is doing to the earth, but what man is doing to the earth. And the Good Book promises judgment for those who do the wrong thing: "The nations were angry, and your wrath came, as did the time for the dead to be judged, and to give your bondservants the prophets, their reward, as well as to the saints, and those who fear your name, to the small and the great; and to destroy those who destroy the earth." - Revelation 11:18

What makes me frequently want to retch is hearing corporatist shills try to use religion (or more accurately, a corrupted understanding of religion) to justify hanging onto a status quo which favors the rich when the all the evidence and the most basic common sense is screaming to reject that status quo. This is the problem with people like James Dobson as well as less sophisticated people like the author of this article. Nowhere does the Bible forbid people to believe that mankind is capable of making huge messes. And nowhere does the Bible promise that God will keep us from having to take responsibility for those messes. No one gets a free pass from having to live responsibly.

Geologists debunked the Noah legend decades ago. One could not believe God is the genocidal god some people claimed he was anyhow. Killing all of mankind except one family, terribly violent literature, and false.

And this is my POV (excuse me, but I'm in screen writing mode tonight):

Me: You say your God is omnipotent, compassionate and all knowing?

Persuader: Yes, believe in Jesus as the Son of God, accept Him as your Savior and you shall know everlasting peace in Heaven.

Me: So, if your God is omnipotent and all knowing does it not seem logical that no matter that what I think or believe that when I die and move on that your God will get the last word? Furthermore, if He is compassionate, He will grant me life in Heaven because He is full of Love? Therefore, it doesn't matter a hoot what I believe because its all taken care of.

Persuader: Here's the pamphlet, I'm sorry but I do have to be somewhere else now.

My interest in trying to use holy books as the reasons for my conduct ends with the

A more literal translation

If you've got a set of rules/promises that are inviolably set by a supreme being then also having a large amount of ambiguity from multiple translations, interpretations and arguments about how changing contexts should be incorporated is a fundamental problem. (Scientific writings are also often ambiguous, but they aren't put forward as inviolable, ultimate truth but rather ambiguities should be removed by further experiment and writings.)

According to multiple sources, Aurora police made a routine traffic stop Sunday morning at 2:38 a.m. and arrested 28-year-old Tharin Gartrell. Sources say he was driving a rented pickup truck. The Secret Service says two rifles were found in his truck along with methamphetamine. Another law enforcement source says he was told at least one of the rifles was a "sniper rifle."

A second source told CBS4 Investigator Brian Maass authorities told officers they are concerned they may have come upon a possible "assassination plot."

That arrest then led authorities to a second man staying at the Cherry Creek Hotel at 600 South Colorado Blvd in Glendale. When authorities knocked on the man's door, they say he jumped out of his sixth floor window, landing on an awning and running from the scene. They say they soon found him with a broken ankle. He too was arrested.

Its unclear precisely why authorities suspect the men were targeting Barack Obama, but one of the officer's who was briefed says he was told at least one of the suspects made statements to that effect.

Then we'll hear the back story. Barack, God bless his soul, makes it to Forest Lawn before the South Lawn and its all because of some whacko's on Meth. At least there are two of them and they probably think a grassy knoll is a character from Shrek.

Uh-Oh, tin foil hat time!! But we'll see what happens around All Hallowed Eve's Night. To take a glimpse into the possible, read:

Bunk? Maybe, but why is the law on the books? That is the salient question. But I'm willing to put a little prognostication on the line; Barack is assassinated (remember Meth whackos are responsible and they have two magic bullets), Bush calls a national emergency, whatever happened to the presidential election of 2008, and you find yourself slopping chow for a National Guard base in Idaho while "red" dissidents are loaded onto rail cars resembling auto transport cars.

They have a mechanical gage on the side of the locomotive at the tank and have a digital one in the cab (computer operated I think). Could be the gage on the control panel did not read correctly and maybe someone did siphon a few hundred gallons. Trains like this use about 1.5 gal/mile if pulling five or six cars (seating 400) moving at 80mph.

On the Boliva events noted up top, here is a pdf backgrounder that will help those wanting to understand the dynamics in this situation. Given the recent precedents regarding secession--Kosovo, Ossetia, Abkazia--we could see this escalate as the usual destabilizing culprits courtesy of the US are already at work in Bolivia and have been for many years now.

There wasent a response up when it went of line. I think the market assumed it would be back quickly

This market is all over the place at the moment its almost immune to news items very strange..

One things fore sure oil is going to saw tooth its way up. OPEC's next meeting is going to be very interesting wish we had a fly on the wall there announcement could set the markets direction for a bit..

I think the markets are reacting exactly as I would expect,considering peak oil is starting to gain mass
awareness.
Todays broader indices had their worst session in several months...on top of the near 15% YTD declines.
Many mid-size banks are failing and many larger banks
have already been teetering.Goldman-Sachs and
Lehman Brothers ...Fannie & Freddie are gonna need a
emergency trachotomy to keep the patients breathing.
Another bank was taken over by the FDIC last FRI and
reopened today under FDIC.Americans arent aware the
FDIC isnt a govermental institution....its private.
Then of course they arent aware that Freddi and Fannie
are quasi and make profits private but losses are born
by the public (read tax payers). Americans arent aware
that the FED reserve has twelve branches and how the
tenticles of the beast work.
Americans wouldnt know a long carbon chain from a
Diebold voting machine dump program. Soon everyone's
IRA and 401-k and their kids 529's are gonna be so far
in the tank...then wonder how it all happened.
Its like they couldnt possibly see it happening when it was happening.Americans can be programed to hate
with vigor a Nobel peace prize winner who has a halo
by simply getting the media and a few public figures
to vilify him.
It isnt even a necessity to pass out pieces of silver to bribe the crowds anymore.
Just a few short sound bites during prime time and the
deed is done.

The job creation number was pretty good-I wonder what the USA wind industry could accomplish with 50 billion of taxpayers money (the amount Detroit is requesting). At least the wind industry has future prospects.

The prospect of global wars driven by climate change is not something often discussed publicly by our political leaders.

I remember hearing, at least a few years ago, that a report from the Pentagon on National Security threats had Global Warming as the top concern. The Bush administration then altered it to remove Global Warming from it (or just buried the whole thing) so that terrorism could remain our nation's top concern.

Are we moving to early prepayment of I-NPK all the way up the logistics channel to the P & K miners, the sulfur extractors, and the Haber-Bosch factories?

http://www.cattlenetwork.com/Content.asp?ContentID=247383
------------------------
Ag Update: Changes In Retail Fertilizer Market Impact Producers
-----------------------
Imagine a postPeak scenario of having to order and prepay for I-NPK two years before finally getting shipment. Have you hugged your bag of NPK today?

This is not that farfetched an idea: historically, it probably took two years or more to inject the cash required for long process of the ships to sail from the British Isles, then around the Cape to the guano islands, load up the ships, then return.

just like to comment that the oil drum is viewable on the psp fat(old 1000/1001) using the homebrew port of the links2 browser. it might be viewable on the psp slim's built in browser with the expanded web memory.

..In brief, he’s looking for strong wheat markets through this fall and winter. Corn will also be strong and will go back and test the summer highs. And for soybeans, it’s a run for your life situation—nobody knows how high they’ll go.

Just back from USDA’s Outlook Conference, Mike has a lot of fresh information. For instance, guys up in North Dakota, Minnesota and Wisconsin are saying the corn just flat isn’t going to make it. “It’ll run headlong into problems with frost...
---------------------------
More potentially bad news in the link

http://economictimes.indiatimes.com/News/News_By_Industry/Indl_Goods__Sv...
-----------------
NEW DELHI: The fertiliser industry has urged the government to provide subsidy in the form of cash and not bonds, saying the long-term special securities are trading at heavy discounts impacting the balance sheet of companies.
----------------
Bonds are just a financial expression that the future will be better than the present--> it appears that many are now giving up this hope.

I-NPK & seeds are the most future-oriented real value assets that I can think of among all the products and services available for sale. National Security is dependent upon these assets. Since job specialization depends upon food surpluses: it can be argued that none of these other, mostly useless products will be available if the farmers fail to get the inputs they need.

Recall my earlier scenario of postPeak trading with a farmer/gardener: someone with a few bags of I-NPK being successfully rewarded versus a Yerginite trying to get the farmer to buy his big screen HDTV.

...But the clean burning of coal appears to be with us right here and now. Neumann's invention, five years in the making, uses a secret chemical formula to clean up sulfur dioxide, nitrogen oxide and particulates. Other inventions to clean up coal emissions have been too bulky and expensive to catch on. Neumann's invention is less than a tenth the size of competing equipment and it costs two-thirds less.

City officials say early results have exceeded all expectations, and the device has outperformed anything else on the market.

Congratulations to Neumann, and to the Colorado Springs Utilities for working together in an invention that could change the world...
-------------------------

http://www.webwire.com/ViewPressRel.asp?aId=73229
-------------------------
ARGONNE, Ill. (Aug. 2008) — A commercial-scale process to extract and reuse pure hydrogen from the hydrogen sulfide that naturally contaminates unrefined oil, including oil sands, is one step closer to reality thanks to a collaboration between the U.S. Department of Energy’s Argonne National Laboratory and Kingston Process Metallurgy Inc. (KPM) of Kingston, Ontario.

Argonne and KPM researchers have invented a molten copper reactor, an innovative process technology that is more energy-efficient than existing methods, according to Gregory Krumdick, an engineer in Argonne’s Energy Systems Division. Moreover, the pure hydrogen gas stream that it extracts can be used to upgrade and clean crude oil and petroleum products and aid in a number of refining processes, KPM President Boyd Davis said. Krumdick, Davis, Alain Roy, KPM’s vice president of operations, and former Argonne researcher John Hryn invented the technology.
------------------------------

THE OFFICIAL INTENSITY FORECAST IS INCREASED AND NOW CALLS
FOR GUSTAV TO BE A MAJOR HURRICANE IN THE NORTHWESTERN CARIBBEAN
SEA. IT IS WORTH NOTING THAT BOTH THE GFDL/HWRF FORECAST SHOW AN
EVEN STRONGER HURRICANE. MOST INDICATIONS ARE THAT GUSTAV WILL BE
AN EXTREMELY DANGEROUS HURRICANE IN THE NORTHWESTERN CARIBBEAN SEA
IN A FEW DAYS.

"MAXIMUM SUSTAINED WINDS HAVE INCREASED TO NEAR 85 MPH...140
KM/HR...WITH HIGHER GUSTS. GUSTAV IS A CATEGORY ONE HURRICANE ON
THE SAFFIR-SIMPSON SCALE. THE HURRICANE COULD BECOME A CATEGORY
TWO HURRICANE BEFORE LANDFALL IN HAITI LATER TODAY.

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“It's difficult to get a man to understand something if his salary depends on him not understanding it.”